Far East Consortium (00035.HK): Sells 100% of Charter Joy for HK$750 Million; Ultimate Beneficial Owner is JD.com
Far East Consortium International Limited (00035.HK) announced that on July 3, 2026, the seller (an indirect wholly-owned subsidiary of the company) entered into a sale and purchase agreement with the buyer, pursuant to which the seller conditionally agreed to sell and the buyer agreed to purchase the sale shares, representing the entire issued share capital of the target company as at completion. Upon completion, the target company will cease to be a subsidiary of the company, and its financial results will no longer be consolidated into the group's financial statements.
The buyer is JD Fabulous Development XI Limited, a company incorporated in the British Virgin Islands, whose ultimate beneficial owner is JD.com, Inc. The preliminary purchase price is HK$750 million, subject to completion adjustments. The property has been converting its guest rooms into units for use as student accommodation, with full conversion expected to be completed in the second half of 2026.
Under the management agreement to be entered into at completion, the manager (also an indirect wholly-owned subsidiary of the company) shall continue to manage and operate the property as student accommodation for a period of three years, paying guaranteed income of HK$45 million per annum to the target company during the three-year term. The seller unconditionally guarantees the manager's performance of its obligations under the management agreement, up to a maximum amount not exceeding the guaranteed income for the three-year period.
The target company's audited net loss after tax for the years ended March 31, 2025, and March 31, 2026, was approximately HK$29.86 million and HK$19.11 million, respectively. The audited net book value of the property as of March 31, 2026, was approximately HK$265.9 million.
The company estimates that upon completion, the group will record a gain of approximately HK$423 million from the transaction. Upon repayment of the relevant property mortgage at completion, the group's bank borrowings will decrease by approximately HK$630 million. The directors expect that after repaying the above bank loans, the remaining proceeds of approximately HK$106 million will be used as the group's general working capital.
Considering that all applicable percentage ratios other than the consideration ratio are well below 25%, the company has applied to the Stock Exchange, which is considering adopting an alternative size test based on the company's total equity as of March 31, 2026. If the alternative size test is not approved, as the highest applicable percentage ratio exceeds 25% but all applicable percentage ratios are below 75%, the transaction would constitute a major transaction. The transaction has received written shareholder approval from Tan Sri Dato' David Chiu, Sumptuous Assets Limited, and Modest Secretarial Services Limited (collectively holding approximately 55.56% of the issued share capital).
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