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Vanke denies promising Shenzhen Metro $299M dividend

china.org.cn / chinagate.cn by Yan Pei, September 13, 2016 Adjust font size:

View of the headquarters of China Vanke Co Ltd in Shenzhen city, south China's Guangdong Province. [File photo] 

China Vanke, the country's largest developer when measured by sales, denied on Monday having promised a 2 billion yuan (about US$299.4 million) annual dividend in its asset-swap deal with subway operator Shenzhen Metro.

Vanke's announcement came after comments by Shenzhen Metro's chairman Lin Maode that have caused concerns among China's market regulators.

"Many people know we are making a deal with a publicly listed company right now, and many have asked me why we got into this," said Lin a at seminar last Thursday. "It's because we were promised a 2-billion yuan (about US$299.4 million) annual dividend from the company, which would provide us with strong cash flow."

Lin did not identify the listed company, but it was generally accepted among the attendees that he was taking about Vanke.

In response to an inquiry from the Shenzhen Stock Exchange, Vanke said it did not promise to pay the multi-billion yuan dividend to Shenzhen Metro. Also, Lin's comments "were based on previous outstanding performances by Vanke and its dividend payment policies, confidence in the 'subway plus property' development model and forecast of the investment," said Vanke, citing a reply from Shenzhen Metro.

In June, Vanke announced that it would acquire a unit of the Shenzhen Metro for 45.6 billion yuan (about US$6.8 billion) via a new share issue, making the subway operator its biggest shareholder. The move was aimed at warding off a takeover from property and insurance company Baoneng Group. Baoneng currently holds a 25-percent stake in Vanke through two subsidiaries.

Vanke's deal with Shenzhen Metro was later rejected by Baoneng and China Resources (Holdings) Co., Baoneng's second-largest shareholder.