Weiye Holdings to inject over 122m yuan in property tie-up

WEIYE Holdings has entered into an agreement through a wholly-owned subsidiary to pick up 40 per cent in equity in a property developer, Huzhou Ganghong Zhiye Co, Ltd, (HGZY) for eight million yuan (S$1.64 million).

The cooperation memorandum of understanding that was signed between the subsidiary, Hongji Weiye (Hainan) Non Movable Property Management Group Co, Ltd, and HGZY's shareholder, Jiangshu Gangda Zhiye Co, Ltd, pertains to the joint development of land-use rights and co-development of about 57,734 square metres of residential land.

The deal also calls on Hongji Weiye to extend an interest-free shareholder loan of 114.8 million yuan to HGZY. The loan, which has no fixed term of repayment, will fund the payment for the land-use rights to the local land authority.

Hongji Weiye has paid a refundable deposit of about 74.4 million yuan to HGZY on signing the deal. This deposit covers the pledged capital injection of about eight million yuan, with the remainder 66.4 million yuan as part-fulfillment of the shareholder's loan.

The deal became legally binding on Dec 29, following completion of due diligence, Weiyi Holdings said.

The mainboard-listed company expects to fund the equity injection and shareholder's loan using its internal resources and bank loans.

It said the deal is not expected to have any material impact on the net tangible assets per share and earnings per share of the company and the group for the current financial year ending Dec 31, 2017.