China International Holdings, on Dec 21, announced that it has disposed of its 50% stake in Beijing Kaiyuan Wanjia Management Consulting Company for a cash consideration of RMB2 million ($388,080).
On Dec 18, China International Holdings’ wholly-owned subsidiary, CIHL (Tianjin) City Development Limited, entered into a share transfer agreement with Beijing Kaiyuan Wanjia Management Consulting Company Limited, Beijing Hongkunweiye Property Development Co. Ltd and Yichang Xinshougang Property Development Company Limited to dispose of its shares.
Upon the completion of the disposal, CIHL (Tianjin) City Development Limited will cease to hold any shares in Beijing Kaiyuan Wanjia. The latter will also cease to be an associate of China International Holdings.
According to China International, Yichang Xinshougang had entered into a cooperation agreement with the local government on Oct 18, 2006.
In the event that the local government makes any payment under article 5(2) of the cooperation agreement (in relation to the amount of RMB105 million paid by the project company in connection with an urban investment litigation), all rights and interests thereunder shall belong to CIHL (Tianjin) City Development Limited.
In its statement, China International Holdings, CIHL (Tianjin) City Development Limited, Beijing Kaiyuan Wanjia and Yichang Xinshougang will “continue to cooperate and use their best endeavours to obtain such payment by the local government after completion of the proposed disposal.
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To China International, the proposed disposal offers an “efficient and cost-effective exit for the group from the Yichang project and allows management to focus its time and resources on the group’s other business endeavours”. Since its subsidiary’s acquisition of the sale shares in 2013, property sales in the project have been “sluggish”.
“As the value of the Yichang project has already been substantially realised over time by the distribution of cash and properties in-kind, its residual value as assessed by management and confirmed by the valuation report, is nominal,” says China International.
Based on the last announced consolidated audited financial statements of the group for the FY2021 ended Dec 31, 2021, the book value of the sale shares recorded in the group was nil, and the net tangible asset value of the sale shares shown in the target company was approximately negative assets of RMB22.18 million.
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The proposed disposal is supposed to take place on or before Dec 31.
Shares in China International closed 3.8 cents higher or 37.26% up at 14 cents on Dec 21.
