Goldin loses $450m amid mysterious prime site deal

Cash-strapped Goldin Financial (0530) took a dramatic turn in the sale of its Kai Tak residential site, as it canceled a previous deal that made only ten days ago at a loss of HK$450 million after finding a new buyer who offered a higher price.

The lesser-known new buyer, Yan You, has agreed to acquire Kai Tak Area 4B Site 4 in Kowloon from Goldin for HK$3.48 billion, according to Goldin's statement at the Hong Kong stock exchange yesterday. The firms also have reached an additional agreement under which Goldin and Yan You will share the profits from the future sale of residential units and car parks in a 30:70 ratio. Despite the new buyer offering a higher price, Goldin still sold the site at a loss of around HK$2.75 billion.

Goldin intended to use the net proceeds to repay its other borrowings for the payment to the prior purchaser for cancellation and for general working capital purposes.

Goldin will pay HK$2.87 billion to the prior buyer, an offshore company called Sino Shield, including the return of the cash payment and the related costs and expenses for the cancellation. Goldin expects the cancellation will lead to a loss of around HK$450 million.

Shares of Goldin fell 7.83 percent to HK$1.06 yesterday.

The local developer, chaired by billionaire Pan Sutong, acquired the 9,708-square-meter residential site for HK$8.9 billion in November 2018.

The deal is the third sales agreement Goldin reached within two and a half months.

In mid-May, Goldin announced that it would sell the site to offshore company Top Family Group for HK$7.04 billion, at a record loss of HK$2.57 billion, aiming to reduce debt amid the Covid 19-wrecked economy.

But last Friday, Goldin said the deal with Top Family has not proceeded, and that it had signed a new agreement with Sino Shield to sell the site at HK$2.5 billion.

The offshore company also agreed to provide a loan worth not more than HK$1.14 billion for Goldin to renew its existing bank loan with a new facility of HK$2.43 billion.

Even before the pandemic, Goldin incurred a net loss of HK$478.23 million for the second half last year.

In June 2019, Goldin forfeited a HK$25 million deposit after giving up a purchase of a commercial plot in Kai Tak, known as 4C Site 4, just one month after it won the tender for HK$11.12 billion.

Last Thursday, Goldin said it has appointed Gerald Ma Lai-chee as vice chairman and an independent non-executive director. Ma is the executive committee member and general manager of CK Asset (1113) with 24 years of experience in the local property giant, who will provide financial and restructuring advice to the Goldin. But Goldin spokesman said yesterday the two buyers - Sino Shield and Top Family - are not related to CK Asset.