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Scandal-hit Future Land to sell project interests worth up to 15b yuan

Future Land's ex-chairman Wang Zhenhua was detained and then arrested by police earlier this month for child molestation.

Hong Kong

CHINA'S Future Land Development Holdings said on Thursday that its subsidiary Seazen Holdings plans to sell equity interest in projects worth up to 15 billion yuan (S$2.98 billion) to enhance cash flow.

Seazen has already sold interests in 10 projects for a total of 4.15 billion yuan, representing 13.6 per cent of its net assets in 2018, said Future Land, the eighth-largest property developer by sales in China.

This comes after Future Land's ex-chairman Wang Zhenhua was detained and then arrested by police earlier this month for child molestation, sending its shares into a tailspin. The firm had replaced him with his 31-year old son, Wang Xiaosong.

A unit of Jinke Property Group bought six of Future Land's projects for around 1.72 billion yuan, the Chongqing-based group said in a filing on Wednesday.

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The proposed and actual transactions will not have material impact on 2019 operating results and financial performance, Future Land said in separate filings late on Wednesday and early on Thursday.

The developer had said earlier this week that Seazen was in talks to sell around 40 projects to recoup part of the land payment made in the first half.

These transactions will increase Seazen's monetary funds, improve the asset and liability structure, increase the current ratio, and strengthen its ability to repay debts, said Future Land in its filing published on Wednesday.

The newly acquired net cash will provide assurances for investments, and stable and safe operations of other projects, it added.

"Large developers usually buy project companies, not sell. While the sales are good for the company's cash flow, it may be a bad signal for its business," said Toni Ho, RHB Hong Kong head of research.

Future Land will not be a growth play going forward as it was used to be, he added.

The projects to be sold will only be residential ones that are newly acquired in the open market and not ready for sale, the company said. It maintained its 2019 annual contract sales target at 270 billion yuan. REUTERS

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