A small spinoff deal involving CNT Group (00701.HK) may have escaped most people’s attention, but not me. What aroused my interest is the firm’s connection with the late legendary billionaire Tsui Tsin-tong.
Tsui acquired China Paint Manufacturing Company in 1985 and renamed it as CNT. The original operations of China Paint Manufacturing then became a subsidiary of CNT.
Born in Jiangxi in 1941, Tsui moved to Hong Kong with his family at 9. His father died when he was 13. He worked as a messenger and a handyman, and even as a doorman, before he amassed great wealth from property investments.
According to his own account, Tsui made his first fortune by investing in several flats near Prince Edward Road in Kowloon during the 1967 leftist riots.
He had a personal wealth of over HK$30 million at the age of 30 or so, following a quick rebound of property market.
Tsui placed heavy bets on property again during the oil crisis in 1970s and in 1980s when the city was mired in handover uncertainties, and his net worth multiplied with the bold and successful bets.
Meanwhile, there was also speculation that Tsui got acquainted with powerful Chinese military officers and became an active dealer in antiques.
His special network and connections helped him set up the New China Hong Kong Group, a company that listed local tycoons such as Li Kai-shing, Ho Hung Sun and Lee Hon Chiu, as well as prominent Chinese firms such as Bank of China and China Resources, as among its shareholders.
Tsui was at one time even rumored to be a front-runner for the post of Hong Kong Chief Executive.
However, New China Hong Kong Group was forced to liquidate following the 1998 Asian financial crisis due to high leverage. And Tsui lost a significant chunk of his wealth.
He started to donate his antiques and art collections and established T.T. Tsui Gallery of Chinese Art.
In March 2010, Tsui suffered a stroke while he was attending the 11th Chinese People’s Political Consultative Conference in Beijing. In April that year, he died in Beijing at the age of 69.
Returning to our original story, although there is nothing exceptional about the deal, it is noteworthy that Chuang’s Consortium (00367.HK), the second-largest shareholder with 19 percent stake, has launched a petition against CNT Group over the spin-off.
The spat centered on a land plot in Shenzhen. China Paint Manufacturing owns a land site with an area of 60,000 square meters in Shenzhen. The land currently serves as factory property, but its use could be changed for residential purpose, making it potentially worth a lot more.
Amid this situation, some shareholders complained about lack of proper valuation of the businesses and assets involved in the spin-off.
On the whole, the dispute highlights the conflicting interests we often see between controlling shareholders of firms and other stakeholders.
This article appeared in the Hong Kong Economic Journal on June 27
Translation by Julie Zhu
[Chinese version 中文版]
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