Evergrande backer Chinese Estates' stock soars on take-private offer

Hong Kong

SHARES of Chinese Estates Holdings, a former major shareholder of embattled developer China Evergrande, jumped as much as 32 per cent on Thursday (Oct 7) after it announced an offer to be taken private for HK$1.91 billion (S$333 million).

The Hong Kong developer said on Wednesday the family of Chinese Estates' biggest shareholder, Joseph Lau, had proposed to take it private by offering minority shareholders a 38 per cent premium to its last traded price.

The offer represents the latest move by Lau and China Estates to emerge from the shadow of Evergrande, which is floundering due to a huge debt load and threatening the Hong Kong company's future.

Formerly Evergrande's second-biggest shareholder, Chinese Estates has already slashed its holding over the past few months to 4.39 per cent from 6.48 per cent. It has flagged a goal to exit the holding completely and estimates a loss of HK$10.41 billion for the current year from the stake disposal.

Eugene Law, business development director of China Galaxy International Financial, said as a listed company Chinese Estates would need to keep updating on its position in Evergrande and "it does not want that trouble".

Once China's top-selling property group, Evergrande is facing one of the country's largest-ever defaults as it struggles with more than US$300 billion of debt. Its fate is also unsettling global markets wary about the fallout of one of China's biggest borrowers toppling.

Chinese Estates' shares rose to HK$3.81 by noon. They resumed trading on Thursday after being suspended on Sep 29. REUTERS