New World's NWS sale, dividend get green light

Staff reporter and Reuters

New World Development's (0017) shareholders have approved a deal to dispose of its stake in NWS (0659) to help it cut its debt, giving a green light to distribute a special dividend of HK$4 billion.

The property developer, which has one of the highest debt ratios among peers after a years-long expansion spree, would receive HK$21.8 billion from the sale of a 60.86 percent stake in NWS to its major shareholder Chow Tai Fook Enterprises.

As many as 99.35 percent of independent shareholders voted in favor of the buyout offer at yesterday's extraordinary general meeting, the company said.

The disposal "generates immediate value for shareholders, repositions the company around its property businesses and supports its broader efforts to reduce leverage in the expectation of persistently high-interest rates", NWD said after the approval.

Chow Tai Fook Enterprises, which is controlled by local billionaire Henry Cheng Kar-shun and his family, holds about 45.2 percent of NWD shares, meaning it will receive HK$1.8 billion from the NWD as a special dividend. Cheng did not attend the EGM yesterday.

NWD posted a net profit of HK$900.9 million for the year ended June, down by 28 percent from a year ago. Without NWS, it would have posted a net loss of HK$510.1 million.

"NWD's balance sheet will be strengthened. Yet, it is inevitable that we see some negative impact on future earnings and dividends," said CLSA analyst Alvin Wong in a report that slashed NWD's target price to HK$10.96 from HK$29.9 after the firm cut its dividend by 63 percent to preserve capital.