Hedge fund wins partial victory in bid to grab shares in Sun Jiangrong\'s property firm
by SCMP
Stark Investments, the multibillion-dollar US hedge fund, has scored a partial victory in its long-running cat-and-mouse fight to seize assets from Sun Jiangrong, a Fujian tycoon it is pursuing over a S$120 million (HK$660 million) unpaid loan.
Stark, which lent Sun\'s private company Thumb Holdings the cash in 2007, has been battling the businessman in Hong Kong and mainland courts for almost a year in an attempt to win shares in his 10 billion yuan (HK$11.35 billion) property developer, Chongqing Dading, as compensation for the unpaid debt.
Yet Sun has now twice succeeded in transferring ownership of the real estate company to an outside entity allegedly controlled by his brother-in-law, using slightly different tactics each time.
The Chongqing court has published an asset freezing order effectively barring Sun from moving ownership of Chongqing Dading anywhere and earmarking the shares for Stark\'s ownership, should the hedge fund win its court case.
In a separate case, Sun has run into trouble over Sino-Environment Technologies, a Fujian-based waste management company he founded which is listed on the Singapore stock exchange.
Sino-Environment has defaulted on its US$109 million of corporate bonds. Its auditors, PricewaterhouseCoopers, said in November last year it could not verify the whereabouts of US$85 million of the company\'s cash.
Sun resigned as chairman of Sino-Environment in January, along with the firm\'s entire executive board.
Stark\'s battle with Sun began in February last year, when the hedge fund\'s loan to Thumb, came due but was not repaid.
In May last year, the Hong Kong High Court appointed accountants Ferrier Hodgson as receivers of one of Sun\'s companies which owned Chongqing Dading, named Top One A.
But the receivers then discovered Top One A no longer owned the property firm. Ferriers director John Batchelor told the Hong Kong High Court last August that Chongqing Dading\'s shares had been moved into an entity named Fujian Dahong, which he claimed was controlled by Sun\'s brother-in-law, Sun Jing Sheng.
Sun Jiangrong declined to comment while his brother-in-law could not be reached.
In June last year, the Chongqing court froze the Chongqing Dading shares, which should have made it impossible for Sun to move them beyond Fujian Dahong. But Sun tried another tactic.
In May, he also moved shares in Chongqing Dading\'s three subsidiaries that own its land to Fujian Dahong, companies registry filings obtained by the South China Morning Post (SEHK: 0583, announcements, news) reveal.
Stark discovered this second transfer of Chongqing Dading last month, an adviser to the hedge fund confirmed.
This week, the Chongqing court froze the shares in the three Chongqing Dading subsidiaries, preventing them from being moved even further out of Stark\'s reach.
The hedge fund is also involved in the Sino-Environment debacle.
In May, Stark seized Sun\'s 56 per cent stake in the Singapore-listed waste management company as partial compensation for the unpaid debt. Because Sun lost control of the company, Sino-Environment defaulted on contract terms with its bondholders, who are owed US$109 million.
Shares in Sino-Environment had slumped 85 per cent since January 2009 until September, when the Singapore stock exchange suspended the stock from trading.
The Monetary Authority of Singapore is investigating the company. The Fuzhou police said in January they found no evidence of embezzlement at Sino-Environment.
Jones Lang La Salle valued Chongqing Dading at 10 billion yuan in 2008, according to court papers reviewed by the Post.
Last edit: 13 years 3 months ago by niadmin. Reason: formatting
Sino-Environment (under JM) The Straits Times
Aug 25, 2011
Chinese firm eyes Sino-Environment
Takeover bid could give state-owned company listing here
By Jonathan Kwok
A UNIT of a major Chinese state- owned enterprise wants to list in Singapore by taking over the listing status of beleaguered Sino-Environment Technology Group.
This offers some relief for Sino-Environment shareholders.
But for every 1,000 Sino-Environment shares, investors could end up with only four shares in this white knight, Avic International Investments. Still, at least they will be getting something - and Avic International says it has a bright future.
Avic International is the shipbuilding management arm of the Aviation Industry Corp of China Group, which is owned by Beijing and has more than 20 subsidiaries listed in China and overseas.
Singapore's status as a maritime and financial centre is the reason the parent company wishes to list its shipbuilding business here, said Avic International's non-executive chairman Diao Weicheng at a briefing yesterday.
Sino-Environment's creditors and shareholders will vote tomorrow on whether to agree to the proposal, which would see $6 million worth of Avic International shares split between them.
Sino-Environment, suspended from trading since September 2009, is under judicial management. It will be delisted and its mainboard listing status given to Avic International.
To comply with the shareholding spread requirements of the Singapore bourse, Avic International will place up to 65 million shares with institutional investors, which could raise net proceeds of about $28.7 million.
These shares' indicative price range is between 20 cents and 50 cents, and the final price will be determined through book-building. This placement price is also the figure Sino-Environment's creditors and shareholders will look at to determine how many shares they will get. The firm's last traded price was 13.5 cents.
Of the $6 million worth of stock earmarked for them, some $5.32 million of shares will go to creditors, with $680,000 of shares for shareholders.
Shareholders will receive one Avic International share for every 250 shares they hold if the placement price is 50 cents. This figure will change if the placement price is different. Their Sino-Environment shares will then be withdrawn from the Singapore Exchange's official list.
'Sino-Environment is a clean and simple shell for us. So we chose that. This is the simple way for us to be listed on the Singapore Exchange,' said Dr Diao.
Last year, Avic International recorded revenue of 76.5 million yuan (S$14.4 million) and net profit of 56.1 million yuan. It offers management and consultancy services to shipbuilders, such as marketing, client management and project management.
After listing here, Avic International will acquire the ship trading business of its parent company within a year. Within two years, it will acquire the parent company's three shipyards, giving it a shipbuilding capability.
Dr Diao cited the red-hot Chinese shipbuilding industry as a boon for his company. China is tussling with South Korea to be the largest shipbuilding nation in the world, and the sector receives strong support from the government and domestic shipowners.
Asked about the corporate governance scandals that have tarnished the reputation of China firms here, Dr Diao emphasised that Avic International is mindful it is a 'representative of the Chinese government'. 'As a member of... a state-owned company, we are responsible not only for the company, for the investors, but also for the society.'
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