Amid widespread concerns over the government’s extradition bill, a local financial company has decided to walk away from a land deal in Kai Tak and forfeit HK$25 million as a result.
In a stock exchange filing on Tuesday afternoon, Goldin Financial Holdings Ltd. (00530.HK) said the decision was made at an urgent board meeting called at the request of its independent non-executive director Abraham Shek Lai-him to discuss its tender for land use rights for a land parcel at Kai Tak Area 4C Site 4.
Goldin, which won the tender in May this year with a bid of HK$11.1 billion, has already paid a non-refundable deposit of HK$25 million for the site at the Kai Tak Development Area in Kowloon East.
The meeting was held to decide whether Goldin should withhold funding to High Smart Investment, a wholly-owned subsidiary, for payment of the balance of the land premium, which was due on Tuesday.
According to the filing, three executive directors and three of the independent non-executive directors voted for withholding of the funding on the ground that “recent social contradiction and economic instability would have negative impact on the growth of Hong Kong commercial property market”.
Board chairman Pan Sutong, who voted against, said he believes the social and economic situation in the city would not affect the local property market in the long term.
However, as the “yes” votes won, Goldin decided to abandon the development project and lose the deposit as a result, which is a rare case in government land tenders, the Hong Kong Economic Journal reported.
The decision also means the government will be entitled to re-launch the tender process, and all losses and expenses involved in the resale of the land parcel will have to be assumed by High Smart Investment.
Hui Wai-man, one of the executive directors who voted in favor of Goldin withholding the funding, said losing the deposit would have limited impact on the company’s financials.
Pan said the board’s decision made him feel confused and helpless. He said he would bid for the land parcel in his own name in the future.
Shek stressed that Goldin has a positive view of the extradition bill and is still confident in Hong Kong.
However, the project would require the company to invest HK$18 billion more in its development.
As such, it would not necessarily be a good decision from the risk perspective, as Hong Kong is facing not only social contradictions but also macroeconomic issues in the short to medium term, he said.
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