(Yicai Global) Nov. 18 -- Chinese real estate chain 5i5j Holding Group is mulling buying out cash-strapped long-term rental apartment platform Danke Apartment, The Economic Observer Online reported today, sending their shares skyward. 5i5j is reviewing the target's accounting data and the scheme is still up in the air for now.
Beijing-based 5i5j's shares [SHE:000650] closed 6.05 percent up at CNY7.19 (USD1.10) today after rising by the 10 percent daily limit to stop trading at CNY4.19 yesterday on rumors the report confirmed today. The unconfirmed acquisition also pushed Danke’s Beijing-headquarteredparentPhoenix Tree Holding’s stock [NYSE:DNK] to close up 7.15 percent at USD2.40 yesterday.
Danke, which is both an asset management and residential service platform, recently became mired in a financial morass. Many landlords and tenants descended on its Shenzhen branch on Nov. 16 to demand termination of their contracts out of fear their rights and interests might otherwise be impaired.
Ziroom, a rental platform of real estate brokerage brand Lianjia, 5i5j-backed rental platform 1zu and others contacted Danke regarding a possible takeover, the report cited a person close to the negotiations as saying. Several 5i5j executives, including its Chairman Xie Yong, negotiated with the e-renter on several occasions, but Ziroom sat out the in-depth discussions.
Any prospective acquiring party's misgivings will largely be that acquiring Danke will necessitate taking on a millstone of debt, the source said, with the need to make good on the company’s losses and pay landlords’ rent and workers’ wage arrearages, hoping meanwhile its tenants will stay pat.
None of the firm's employees could draw their salaries for this month and when these will be forthcoming is still unknown, The Paper reported yesterday.
Editor: Ben Armour, Xiao Yi