Hong Fok Corp could take control of associate after unit's share buyback proposal

PROPERTY developer Hong Fok Corp (HFC) on Monday said its 42.33 per cent unlisted associate company, Hong Fok Land International (HFL), plans to buy back all of its own shares at HK$0.55 (S$0.095) per HFL share.

HFC has undertaken not to accept the share buyback offer for any of the HFL Shares, which means that its interest in HFL may increase to more than 50 per cent after the buyback, in which case HFC will become a holding company of HFL. HFC will seek a whitewash waiver to avoid having to make a general offer for HFL if that happens.

HFL currently has 1.49 billion shares outstanding. Excluding HFC's 631.72 million HFL shares, that could put the total bill for the buyback at about HK$473.38 million if every other HFL shareholder accepts the buyback. HFL will finance the consideration payable for the share buyback offer using a loan facility.

The share buyback offer will be conditional upon approval by at least 75 per cent of HFL's independent shareholders for the buyback offer and the whitewash waiver. The buyback offer must also not be rejected by more than 10 per cent of independent votes cast.

HFL also has an approximately 20.4 per cent stake in HFC.