Fosun bonds fall, stock halted after report chairman Guo missing

[BEIJING] Fosun International bonds plunged by a record and the company suspended its shares in Hong Kong after Caixin magazine reported that billionaire Chairman Guo Guangchang had gone missing.

Closely held Fosun Group, which controls Fosun International, has "lost contact" with Mr Guo, 48, the magazine said, citing people it didn't identify.

The shares declined for a sixth consecutive day on Thursday in Hong Kong, losing 1 percent to close at HK$13.34, and tumbled more than 11 per cent to US$1.55 in over-the-counter trading in New York. Fosun International dollar bonds fell by a record, with the US$400 million of 6.875 per cent bonds due in 2020 slumping 16.1 US cents to 88.3 US cents on the dollar as of 9:10 am in Hong Kong.

"The news that the chairman went missing will take a toll on the bond prices and until the company can clarify the situations, and we'd expect further weakness in the near term," Nuj Chiaranussati, a Singapore-based debt analyst at Gimme Credit LLC.

Mr Guo, who calls himself a student of Warren Buffett, built Fosun Group into an empire spanning everything from insurance to holiday resorts through dozens of deals over the past three years, most of them made through Fosun International. His companies own Club Mediterranee SA and Greek jewelry brand Folli Follie, as well as a stake in Cirque du Soleil Inc.

News that Mr Guo is unreachable prompted many related companies to halt trading. Shanghai Fosun Pharmaceutical (Group), Nanjing Iron & Steel, Shanghai Yuyuan Tourist Mart and Hainan Mining suspended trading in Shanghai on "relevant issue" verification, according to Shanghai Stock Exchange.

"The missing chairman is going to have a big impact on investing in China and the performance of the company," said Cyrus Ng, an analyst in Hong Kong at China Galaxy Securities Co.

Fosun International has announced 16 deals worth a combined 29 billion yuan (S$6.3 billion) this year, according to data compiled by Bloomberg. Some of Fosun's biggest acquisitions include One Chase Manhattan Plaza in New York. In July, it said it bought the former Milan headquarters of Italy's UniCredit SpA.

Mr Guo is China's 17th richest man with a net worth of US$5.6 billion, according to the Bloomberg Billionaires Index. Mr Guo co-founded Fosun with four friends and about US$6,000 in capital in the 1990s and later built it by borrowing from the investing approach used by Buffett's Berkshire Hathaway.

In August, China's official Xinhua News Agency said Mr Guo granted favours to an executive of a state-owned company 12 years ago in exchange for unspecified benefits, according to a report in the Wall Street Journal. Mr Guo wasn't accused of wrongdoing, according to that report.

BLOOMBERG