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Friday 16th April 2010 |
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Millennium & Copthorne Hotels NZ chief executive Takeshi Ito is heading to China next week get directly involved in overturning a series of unauthorised asset sales by a rogue local executive that have gutted the hotel company's joint venture.
Ito told BusinessWire that he was uncertain exactly what assets were left in the joint venture, which the company entered into in September 2007.
Properties in Sichuan province were untouched and there was still "quite a bit left in Guandong" province, despite the asset sale spree over the last 10 days by Cheung Ping Kwong - until last November chief executive of the company at the heart of the joint venture's commercial operations.
Cheung made unauthorised sales of properties in the Hainan and Guandong provinces last week representing worth US$47.8 million, of which US$16.3 million belongs to Millennium and Copthorne, which is a 34% participant in the joint venture in China, the company said. He went on to sell a further US$2.5 million of properties on Tuesday this week, comprising an 85% interest in the Kangxie portfolio of two parcels of development land in Guangdong, and a 70% interest in a landscaping and an associated nursery business.
Further such actions by Cheung cannot be ruled out, Millennium & Copthorne has warned. The joint venture represents a relatively small proportion of the $611 million total assets recorded on the balance sheet of the NZX-listed New Zealand hotel group. Its shares fell a further 3 cents, or 6.7%, to 42 cents on the NZX today, following yesterday’s statement of further asset sales.
Ito said Chinese authorities had acted swiftly to cancel and reissue the seals of the companies at the centre of the sales of properties and other assets in Hainan and Guandong provinces, but there was no clarity at this stage as to the progress of criminal investigations.
Also uncertain was whether the process for publicly notifying cancellation of old company seals, which occurred on Wednesday this week after they were registered on Monday, had been quick enough.
Cheung sold the first tranche of assets late last week, and the second, smaller tranche on Tuesday, the day between the official cancellation of the old company seals and public notification of this in a major Chinese newspaper.
"At the moment, I don't the answer to that question and we are asking that question ourselves," Ito told BusinessWire.
A detailed understanding of the situation would require an assessment on the ground in China, he said.
Businesswire.co.nz
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