Connect with us

Hi, what are you looking for?

Economy

He was one of Asia’s richest men, now he’s fending off debt collectors

Shares of property tycoon Pan Sutong’s Goldin Financial Holdings Ltd. plunged and with most of his properties locked up as collateral for loans, he has fallen off the list of the world’s 500 wealthiest people. Goldin Financial’s eponymous skyscraper is at the heart of an asset grab by creditors after the company failed to make timely payments on its outstanding debt. Photo via Goldin Financial/goldinfinancial.com

In just five years, Hong Kong property tycoon Pan Sutong has gone from ranking among Asia’s wealthiest people to having his company’s flagship skyscraper seized by creditors chasing more than $1 billion of debt.

It’s a swift fall from grace for Mr. Pan, 57, who was Asia’s fourth-richest man in 2015 with a net worth of $27 billion, according to the Bloomberg Billionaires Index. But after shares of his Goldin Financial Holdings Ltd. plunged and with most of his properties locked up as collateral for loans, he has fallen off the list of the world’s 500 wealthiest people.

Mr. Pan’s initial wealth came not from property but from dealing in and then manufacturing electronics, an area he ventured into after moving to Hong Kong from California, where he’d spent his teens skipping school and hanging out at his family’s chain of Chinese restaurants. Pan transitioned to property investing in 2008, a few years into a red-hot boom that would mint numerous fortunes in Hong Kong and make it one of the world’s most expensive real estate markets.

He now joins other investors in the city who over-extended themselves during the boom, only to be undone as months of civil unrest and the coronavirus pandemic plunged Hong Kong into its worst recession on record.

Tang Shing-bor, a veteran investor known as the “Shop King” for his vast holdings of retail properties, is seeking to sell billions of dollars of real estate. A group of investors who paid $5.2 billion for The Center in the world’s most-expensive office deal, have been unable to flip floors as the market ground to a halt last year.

“Asset seizures are very company-specific,” said Edward Chan, a credit analyst at S&P Global Ratings in Hong Kong. “If property seizures happen then the company must be in a very bad financial position, with high debt and leverage.” Mr. Chan declined to comment specifically on Goldin Financial’s situation because S&P doesn’t cover the developer.

Even a $1.1 billion loan in September from CK Asset Holdings Ltd., backed by Hong Kong’s second wealthiest man Li Ka-shing, wasn’t enough to help Goldin Financial.

The loan, offered to a unit that owned the firm’s flagship Goldin Financial Global Centre office tower, was to repay borrowings of HK$3.4 billion by intermediary parent companies, Debtwire reported in August. It’s unclear why the CK Asset loan wasn’t used to clear the debt, but the security trustee on the loan is applying to a Bermuda court for Goldin Financial to be wound up. The next court hearing will be held on February 12, according to a Goldin Financial filing.

Mr. Pan, and Goldin Financial, racked up around HK$38 billion ($4.9 billion) of debt between May 2017 and September 2020 for four Hong Kong properties, according to stock exchange filings and data compiled by Bloomberg. At least $1 billion of that debt remains outstanding and tied to Goldin, according to company filings last month.

The latest available figures show Goldin’s net debt to Ebitda, a key measure of leverage, was about nine times at the end of 2018. That compares with a ratio of 2.3 times at the end of 2019 for Sun Hung Kai Properties Ltd., the city’s biggest developer, and around 2 times for smaller developer HKR International Ltd.

Mr. Pan moved from manufacturing consumer electronics such as mobile phones and MP3 players to property in 2008, when he renamed his electronics firm Goldin Properties Holdings Ltd. and purchased a listed company, christening it Goldin Financial. Goldin Properties was delisted in 2017 and Mr. Pan owns a controlling stake in both firms.

Goldin Financial’s downfall can be traced back to Mr. Pan’s strategy of splitting ownership of properties between the company and his own private interests.

Between 2011 and 2020, Pan and Goldin Financial purchased one commercial and two residential properties. Goldin Financial took a 60% ownership stake, while Pan eventually held 40% privately. There was a similar ownership structure for a majority stake in a third residential plot.

But starting in 2018, Mr. Pan decided he wanted to take full ownership of one of the residential properties and a majority stake in another, which are located in Kowloon’s prestigious Ho Man Tin neighborhood and offered good profit potential.

In turn, he sold his share in the other two assets to his listed company. These included 40% stakes in the Goldin Financial Global Centre, his firm’s flagship office tower that was saddled with debt, and an expensive land parcel near the former Kai Tak airport that would have been costly to develop.

As a result, Mr. Pan became sole guarantor for a HK$7.19 billion loan for one of the residential developments, according to people familiar with the matter. At least four banks involved in the loan didn’t agree to the terms of the deal and exited, they said, declining to be identified as they aren’t authorized to speak publicly. This made it harder for Goldin Financial to close subsequent credit lines.

Mr. Pan didn’t respond to a request for comment. A spokesperson for Goldin Financial said the company doesn’t comment on Mr. Pan’s investments that aren’t related to the company and wouldn’t provide information about its own financial situation beyond previous announcements.

The Kai Tak project subsequently hit snags. In late 2019, Goldin Financial failed to raise a loan partly to fund development of the site, the people said. The firm later sold the plot for about HK$3.5 billion, less than half what it had paid in 2018, stock exchange filings and a government land tender announcement show.

The company’s eponymous skyscraper is at the heart of an asset grab by creditors after Goldin Financial failed to make timely payments on its outstanding debt. In July, lenders of the HK$3.4 billion loan demanded immediate repayment, while holders of a HK$6.8 billion senior bond threatened to take over the office block, which had been pledged as security.

Eventually, the receivers linked to the bonds successfully applied to Hong Kong’s High Court to take control of the 27-story building, and were granted ownership in September. They have since entered an agreement to sell the building after a months-long tender.

Goldin said in an exchange filing on Sunday that it’s been told by the receivers that the skyscraper’s sale will be sufficient to repay both the bond and the outstanding loan. The listed company also said that its board is confident that once the sale is completed, legal proceedings relating to the bond and the loan “will be resolved amicably.”

The sale will put Goldin Financial in the unenviable position of going from landlord to tenant as the building housing its headquarters passes from its ownership, a move that mirrors Pan’s own decline in fortunes. — Apple Lam and Shawna Kwan/Bloomberg

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Economy

WASHINGTON — President Joseph R. Biden, Jr., on Thursday urged local governments to pay people to get vaccinated against coronavirus disease 2019 (COVID-19), and...

Economy

LONDON — Carmaker Volkswagen, plane maker Airbus, and energy major Royal Dutch Shell all posted bumper financial earnings on Thursday reflecting a generally buoyant mood...

Economy

More than just a place to eat and sleep, our home should be a sanctuary where we can keep ourselves in the best shape...

Economy

Thailand’s Phuket will ban travel from the rest of the country from Aug. 3 to 16 to try to stop a surge in coronavirus...

Investing

More than 5 million people had a parcel lost or stolen last year, according to Citizens Advice, which has called on the government to...

Investing

The number of people on furlough fell below two million towards the end of June as the economic recovery gathered pace, official figures show....

You May Also Like

Investing

Having a good Instagram marketing agency to back up your Instagram account is an absolute must going into the new year. With competition stronger...

Investing

As a traditionally rigid insurance industry becomes bogged down by antiquated processes and operations, a handful of industry leaders are seeking to shake things...

Economy

US President Joseph R. Biden, Jr., will rely on ally countries to supply the bulk of the metals needed to build electric vehicles and focus on...

Economy

THE Securities and Exchange Commission (SEC) has warned the public from investing or to stop any investment in a group named Maxxprofit Computer Trading...

Disclaimer: SmartRetirementReport.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.



Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!