China Jishan calls off asset disposal, may stave off cash company status

CHINA Jishan Holdings has called off a proposed disposal of a real estate unit, a move that may prevent the Singapore Exchange (SGX) from regarding the company as a cash business and suspending the stock.

China Jishan announced on Wednesday before the market opened that it was terminating a planned sale of wholly owned subsidiary Shao Xing Yue Sheng Real Estate Property Development Co after the buyer did not agree to raising the purchase price.

The purchase price was originally set at 785.8 million yuan (S$161.9 million), but an independent valuation carried out after the original agreement assigned a higher value to Shao Xing Yue Sheng's net assets. As a result, the consideration for the unit was adjusted to 1.18 billion yuan.

China Jishan said that the purchaser, Shanghai Jintumu Real Estate Co, did not agree to the revised price. China Jishan therefore decided to terminate the deal.

If the deal had gone through, the SGX had said in June that it would have considered China Jishan as a cash company. That is because China Jishan has ceased its printing and dyeing business, and with Shao Xing Yue Sheng sold off, it would not have any more operating businesses.

Under SGX rules, cash companies are not allowed to be traded, and China Jishan's stock would have been suspended. The company would then have 12 months to acquire a new business that satisfies requirements for a new listing, and in that period the company's cash and short-dated securities must be placed in escrow.