Taichung-based real estate developer Shining Group (鄉林集團) said yesterday it may post a loss of up to NT$260 million (US$8.56 million) on an investment in a build-operate-transfer (BOT) project should it fail to be followed up.
The company’s warning came after Taichung City Government announced on Wednesday that it was terminating its collaboration with Shining on its proposed International Convention and Exhibition Center (ICEC) project, citing construction delays.
Shining shares plunged 6.91 percent to close at NT$45.15 yesterday, the lowest level since late last year when the stock dropped to a session-low of NT$48 on Nov. 29, Taiwan Stock Exchange data showed.
Shining shares have dropped 23.09 percent so far this year, under performing a decline of 18.01 percent on the benchmark TAIEX, the exchange’s data showed.
In a filing to the Taiwan Stock Exchange yesterday, Shining refuted a Chinese-language newspaper report that it might lose at least NT$400 million on the 60-year BOT project, a massive construction project located in the booming 7th rezoning area of Taichung City, where the new city hall will be located.
Shining denounced the city government’s move to cancel the collaboration as a “unilateral decision” in a front-page advertisement published in both the Chinese-language Economic Daily News and Commercial Times newspapers.
The developer said it would lodge a suit against the Taichung City Government seeking an unspecified amount of compensation, the statement said.
Based on Shining’s original investment plan, it would construct a residential project opposite to the ICEC, as well as co-develop a business complex and bus terminal with partners from Germany and Singapore, which had been expected to bring in handsome annual revenues.
But without the BOT project, in which the city government was to provide the land and Shining focus on construction and project planning, the company’s net asset value would likely drop by 36 percent to NT$72 million from an original estimate of NT$112 million, KGI Securities Corp (中信證券) said yesterday.
The move by Taichung City Government to end its partnership with Shining is only one of a series of negative events to hit the developer recently.
On July 9, Shining chairman Lai Cheng-i (賴正鎰) made a public apology for a “pink trap” scandal involving one of the group’s senior executives that aimed to damage the reputation of a city government official who was in charge of the ICEC project.
Huang Chin-hsiao (黃晴曉), former director of the Taichung City’s Economic Development Department, lost his job earlier this month after a videotape was made public by an anonymous source that showed him drinking with three women at a karaoke bar during a business trip to China last month.
Earlier this week, Lai also announced he was dropping out of a Taipei developers association chairmanship election, after it had been plagued by negative campaigning.
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