(Yicai Global) Dec. 7 -- Tahoe Group's problems are deepening as the Shenzhen Stock Exchange exposed that the troubled real estate firm's controlling shareholder failed to disclose a big sale of pledged equity.
Tahoe Investment did not reveal its shareholding reduction plan 15 trading days before the trade, and some of its holdings were sold 10 days before Oct. 23 when the Fuzhou-based property firm released its earnings guidance for the first three quarters, the SZCE said in a statement on Dec. 4.
On Sep. 15, the Fuzhou Intermediate People’s Court requested Shenwan Hongyuan Securities to sell 68 million Tahoe shares, held by Tahoe Investment, through centralized bidding or block trading because the parent had failed to meet the terms of its equity pledge agreement. Companies pledge their equity as collateral for loans.
Over the 10 trading days before Tahoe released its earnings guidance, Tahoe Investment had its holdings reduced by 13.6 million units, or 0.5 percent of the shares outstanding, according to the guidance.
Going beyond those 10 days, Tahoe Investment's holdings of Tahoe had fallen by 22.4 million shares from Sep. 30 to Oct. 23, making up 1 percent of the total, the real estate firm said on Oct. 24. The sum equals CNY96.4 million (USD14.7 million).
At the end of last year, Tahoe had CNY23.6 billion (USD3.6 billion) in outstanding debts and CNY640 million (USD97.9 million) in late fees. It has defaulted on seven bonds this year.
Tahoe made a loss of CNY302 million to CNY408 million in the third quarter after reporting a net profit of CNY560 million a year ago.
Tahoe Group's [SHE:000732] share price fell 1.6 percent to CNY3.80 (US 60 cents) in the afternoon.
Editor: Emmi Laine