Goldin Financial Holdings released a flurry of announcements late Friday, including the terms of a provisional agreement for a record-breaking sale of its Kowloon East headquarters, as the Hong Kong-listed firm faces end of the month court rulings that could determine its future as a going concern.
In one of four announcements to the exchange, Goldin said that the provisional deal for the sale of the Goldin Financial Global Centre would bring in HK$14.3 billion ($1.8 billion), allowing the company to pay off its creditors and generate fresh working capital.
In the same announcement, Goldin acknowledged that the companies to be sold under the provisional agreement are currently under the control of receivers appointed by its creditors after the company defaulted on HK$6.8 billion in mezzanine financing for the 28-storey tower.
Goldin revealed the terms of its provisional deal on the same day that it released an update on a court petition filed by its creditors in Bermuda, where the company is domiciled, seeking to the wind up the listed entity due to its nonpayment of debts.
That petition is due to be heard on 30 October, just one day after Hong Kong’s high court is set to hear Goldin’s case contesting the seizure of the Kowloon East building by receivers appointed by Deutsche Bank affiliate DB Trustees (Hong Kong) Ltd.
Finding a Mysterious Buyer
Currently facing debts estimated at around $2 billion, the firm run by mercurial billionaire Pan Sutong, told the exchange that a businessman named “Fong Tim” had paid a refundable HK$200 million deposit as part of tentative deal to buy the companies controlling the Goldin Financial Global Centre.
The company acknowledged that officers of restructuring firm Borelli Walsh had taken control of the companies holding the property, but offered that it would seek approval from the courts of Hong Kong and Bermuda as conditions precedent to the provisional deal to ensure its enforceability.
Goldin held out the sale as a way to resolve its debts, which it indicated would make the deal likely to win favour in court.
“Since the Disposal, if materialised, will generate proceeds sufficient to settle all outstanding indebtedness of the Disposal Group in relation to the aforesaid litigations, the Directors believe that there is adequate ground to obtain the court approvals for the Group to proceed with the Disposal,” the company said in its statement.
Goldin had first revealed its deal to sell the companies holding the tower on 30 September, however, market analysts have cast doubt on the reported deal, noting its above-market price and the receivers’ hold on both the companies holding the asset and the property title for the building.
At the reported HK$14.3 billion price in the 29 September agreement, Goldin would be achieving a value of HK$16,423 per square foot for the building, which would set a new record for that area of Kowloon East during a time when the COVID-19 crisis has undermined asset values in the city.
Earlier this month Knight Frank began an expression of interest exercise for the sale of the Goldin Financial Global Centre with the consultancy estimating the property would sell for at least HK$12 billion. Sources at Knight Frank told Mingtiandi that the expression of interest exercise continues to move forward as planned.
The buyer for Cheng Mei Ltd and Goal Eagle Ltd, a pair of companies which are the registered owners of Smart Edge, the local Hong Kong company which in turns holds the property, is BVI incorporated Hundred Gain International Holding Ltd, according to the provisional deal.
In its statement, Goldin identified Fong Tim as the beneficial owner of the purchaser, although Fong is understood not to be a signatory to the provisional deal. Mingtiandi was not able to find a listing of a Fong Tim on the Forbes Rich List or other tallies of billionaire investors.
Under the terms of the provisional agreement, Fong would need to make a further deposit of HK$1.43 billion upon signing a formal ageement, or within 30 days of signing the provisional deal. That schedule would make the next payment due on 28 October, just before Hong Kong’s high court is set to hear Goldin’s request to hand back control of the company holding its headquarters.
Fighting to Stay Afloat
Of Goldin’s three remaining Friday announcements, two revealed delays in filing documents involving the company’s ongoing flurry of asset sales, but a fourth detailed the company’s hopes that it would prevail in the Bermuda court contest at the end of the month, which could hand control of the listed firm to its creditors.
In a winding up petition filed on 7 August, Goldin’s creditors are seeking what is termed a “soft peel” provisional liquidation of the company, which would see the court put in place directors responsible for resolving the company’s debts.
The court originally met to hear the petition on the 15th of this month, however, Goldin was able to have that session adjourned until 30 October so that it could have additional time to prepare.
Goldin promised to “vigorously defend the petition,” which it called inappropriate and without merit. However, the company also acknowledged that, in the event that the petition succeeds and the company is wound up, any transfer of shares or sale of assets after the petition was filed would be void.
The potential for Goldin to be wound up calls into question the viability of a HK$1.38 billion share sale which the company had announced on 9 October. The developer had said at the time that it had agreed with Hong Kong-based placing agent Titan Financial Services Limited to make available for purchase around 20 percent of its total share capital from the nearly 71 percent in equity held by Pan.
The company has yet to provide any updates on the potential share placement.
CK Asset Bows Out
The attempt at a share sale was announced on the same day that CK Asset director Gerald Ma resigned from Goldin’s board, spelling an end to a potential bailout by the Li Ka-shing-controlled developer.
Ma had joined Goldin’s board as vice chairman in July as part of a deal to provide the embattled company with HK$8.7 billion in new financing.
That deal is now understood to have collapsed, with CK Asset and Hong Kong-based private equity firm Hammer Capital Management, which was also party to the deal, said to be pursuing Goldin for HK$100 million in commitment and lien fees associated with the failed financing arrangement.