(RTTNews) - Millennium & Copthorne Hotels New Zealand Limited or MCHNZ, a subsidiary of Millennium & Copthorne Hotels plc or M&C (MLC.L), said Monday that its Chinese joint venture, held through its 34% interest in First Sponsor Capital Limited or FSCL, has encountered certain difficulties arising from the actions initiated by one of FSCL's Chinese joint venture partner Idea Valley Group Limited or IVGL founded by Cheung Ping Kwong.
FSCL owns 75% interest in Idea Valley Investment Holdings Ltd. or IVIHL, in which 20% interest is held by a company controlled by Cheung Ping Kwong. IVIHL in turn owns 100% interest in IVGL which is involved with property related businesses in Guangdong and Hainan, China.
Under a joint venture agreement in September 2007, Cheung was granted management rights over IVGL. In November 2009, Cheung was ousted from IVGL as chief executive officer citing his failure to meet the conditions in the JV deal and his conduct, but he refused to comply.
MCHNZ alleges that in March 2010, Cheung "through deceit" seized control of the company seals of IVGL group companies, terminated people appointed by FSCL, "unlawfully" took control of IVGL's office and denied IVIHL access to IVGL books.
IVIHL has noted that it has taken and is continuing to take all necessary measures to protect its interests in the IVGL group entities, including completing the relevant filings with the People's Republic of China authorities to confirm the removal of Cheung from his various IVGL group appointments and the voiding of the seals which are under his control.
M&C's effective interest in FSCL is 39.8%. Based on unaudited management accounts of the FSCL Group as at 28 February 2010, FSCL's carrying value of the net assets of and a loan to the Hainan Hotel Owning Company and the Dongguan Owning Company is US$47.8 million.
MLC.L shares are currently trading at 484.10 pence, down 10.30 pence or 2.08% on a volume of 36,994 shares on the London Stock Exchange.
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