Chinese Estates shares drop 31% after privatization plan falls through

Shares of Chinese Estates (Holdings) Ltd.
127,
-28.57%
fell 31% on Monday after it said its proposed privatization won’t proceed as it failed to receive a majority of shareholders’ votes. The Hong Kong-listed stock fell below the HK$2.90 level, where it had traded before the company disclosed its privatization offer on Oct. 7. Chinese Estates shares were last at HK$2.68.

The property investor and developer, controlled by Hong Kong billionaire Joseph Lau and his wife Chan Hoi-wan, made an offer to buy all the Chinese Estates shares it didn’t already own for 1.91 billion Hong Kong dollars (US$244.8 million) in an effort to shield the business from the embattled Chinese property sector. Chinese Estates has been raising cash as the Chinese property sector has been hammered by weak property sales. In November, Chinese Estates disclosed plans to sell all its Evergrande shares. It also sold Kaisa senior notes in October at a loss. Liquidity issues among Hong Kong-listed developers have been weighing on the sector, with developers’ shares falling after Fitch Ratings earlier this month said China Evergrande Group
3333,
-6.79%
and Kaisa Group Holdings Ltd.
876,
-8.99%
were in default after missing U.S. dollar-bond payments. These were the latest in a string of developer defaults, after several defaults by smaller developers such as Fantasia Holdings Group Co. Ltd., Modern Land (China) Co. Ltd. and Sinic Holdings (Group) Co. Ltd. in recent months. Corrections & Amplifications This article was corrected at 0351 GMT to reflect the correct monetary conversion of US$244.8 million. The original article incorrectly stated it as US$244.8 billion.

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