Last week Pan Sutong’s Goldin Financial Holdings announced that creditors had seized its Kowloon East headquarters, now local media reports indicate the billionaire real estate boss has had to remortgage his mansion and borrow against his shares in the Hong Kong-listed company in a battle to stay afloat.
Pan, who last year was estimated by Forbes to have a personal fortune of $4.9 billion, during April and May of this year took out second and third mortgages worth a total of HK$600 million ($77.4 million) on his mansion in Hong Kong’s posh Deep Water Bay neighbourhood.
According to public records, Pan has also pledged some HK$2.5 billion in shares in Goldin Financial to creditors including the Macau branch of mainland banking giant ICBC.
Pan’s scramble to raise cash comes after Goldin, which had current liabilities of HK$11.9 billion at the end of 2019 according to its annual report, last month was sued for payment of RMB 1.5 billion ($215 million) in past due financial obligations on an unfinished 1.1 million square metre property project in Tianjin.
Re-Mortgaging HK$2.5B Mansion
Pan took out his second and third mortgages on his home at 75 Deep Water Bay Road through China’s Bank of Communications in April and May, according to Land Registry documents cited by Ming Pao.
The mainland-born tycoon was borrowing against his home, which is just a few doors from Li Ka-shing’s palace at 79 Deep Water Bay Road, around the same time that Goldin Financial sold off a Kai Tak residential plot at a HK$2.6 billion loss as it struggled to pay off debts.
The mainland tycoon, whom Forbes ranked last year as Hong Kong 22nd wealthiest person, had purchased the 13,854 square foot (1,287 square metre) home in 2017 for HK$2.5 billion, or around HK$156,000 per square foot. Soon after that purchase, Pan while rubbing shoulders with Hong Kong’s richest man and local bluebloods such as the Kadoorie family of Hong Kong and Shanghai Hotels undertook an extensive renovation of the hillside home.
Shares Pledged as New Financing Announced
After China Cinda Asset Management, one of the mainland’s four giant “bad asset” banks sued Goldin last month, Pan in a series of transactions last week transferred a chunk of his 70.86 percent holding in the company to new ownership, with records indicating the shares were pledged as loan collateral.
On 14 July, Pan transferred 524 million shares in Goldin to SEA Holdings chairman Lu Chu-mang and entities controlled by the property magnate. At Goldin’s most recent trading price of HK$0.99 per share, that stake, which represents 7.51 percent of Goldin’s total shares, is now worth HK$520 million. Records show, however, that no consideration was paid for the shares, indicating that they were pledged as loan collateral.
Then on 15 July, Pan pledged another 1.9 billion Goldin shares to ICBC Macau, or 28.18 percent of the company’s total equity, also at no consideration paid.
On that same day, Goldin announced in a statement to the Hong Kong stock exchange, that it had arranged new loan financing of approximately HK$8.7 billion.
In that same announcement, the company acknowledged that receivers appointed by Deutsche Bank had seized the 900,000 square foot Goldin Financial Global Center, after the company had failed to make payment on HK$6.8 billion in senior notes.
In addition to the bond crisis, Goldin in that statement acknowledged that subsidiaries of the company had received a letter from Deutsche Bank demanding immediate payment of the principal and interest on a loan totalling just under HK$3.5 billion.