Chinese Billionaire May Privatize Hong Kong Developer

Chinese Billionaire May Privatize Hong Kong Developer

HONG KONG–Zhang Zhirong, a mainland Chinese billionaire who was involved in an insider trading case in the United States last year, may make a privatization bid for his property development company in Hong Kong.

Mr. Zhang, who is the largest shareholder in the shipbuilder China Rongsheng Heavy Industries, is expected to make a buyout offer to independent shareholders of Glorious Property, a Chinese developer in which he already owns a 68 percent stake, the company said Monday in a Hong Kong stock exchange announcement.

A privatization bid would be an opportunistic play by Mr. Zhang.

Despite the strong rebound in Chinese housing prices and sales volumes in recent months, shares in Glorious have slumped and were down 15 percent so far this year before being suspended from trading on Monday. The company’s stock is now more than 70 percent below the price at which it sold shares in its 2009 initial public offering, leaving Glorious valued at 9.7 billion Hong Kong dollars, or $ 1.2 billion.

The 32 percent stake that Mr. Zhang does not already own is worth about 3.1 billion Hong Kong dollars at the current share price.

A successful privatization of Glorious would be a bright spot on what has been a challenging year for Mr. Zhang.

Rongsheng has been hit hard by falling prices in the global shipbuilding industry. In July, laid-off workers temporarily blockaded its plant in Nantong, just north of Shanghai, and Rongsheng announced that it had been delaying payments to suppliers and staff because of a cash crunch. Mr. Zhang had to lend the company 200 million renminbi, or about $ 33 million, of his personal money to help it make payments.

In October of 2012, Well Advantage, a Hong Kong firm controlled by Mr. Zhang, agreed to pay $ 14 million to settle insider trading charges brought by the U.S. Securities and Exchange Commission. The S.E.C. had alleged that Well Advantage relied on confidential inside information to buy shares in Nexen, an oil company based in Calgary, Alberta, just before Cnooc, the Chinese offshore oil producer, launched a $ 15.1 billion takeover bid for the Canadian company.

Mr. Zhang was not personally named in the suit, but the S.E.C. identified him as the owner of Well Advantage. The firm neither admitted to nor denied the S.E.C.’s charges, but the $ 14 million settlement included disgorgement of $ 7 million in illegal trading profits and a $ 7 million penalty.

Weeks after the settlement was officially lodged with a court in the U.S. District Court for the Southern District of New York, Mr. Zhang resigned as a director of both Glorious and Rongsheng, citing personal reasons.



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