By Liu Wen (刘文) June 4, 2013 Economic Observer Online Translated by Zhang Xiaoxi Original article:[Chinese]
A senior executive at Guangyao Dongfang Group (光耀东方) has said the company is discussing acquiring the Guoson Center by the Dongzhimen subway stop in Beijing. But disputes remain over who actually has the right to sell it.
The still undeveloped 600,000 square-meter Guoson Center shopping complex sits at the intersection of three subway lines, making it a very attractive property. An official from Dongcheng District in Beijing said reports that the center would be sold for 12 billion yuan aren’t reliable. “There are equity disputes between GuocoLand China (国浩中国) and APTECH (北大青鸟) over Guoson,” he said. “It’s meaningless to talk about a transfer under this situation. Every year there are many companies discussing acquisition of Guoson, but none of them have succeeded.”
In 2007, the real estate developer GuocoLand China acquired a 90 percent stake in Chengjian Donghua Company, which owns the land rights to the Guoson Center real estate. Before this deal, APTECH was the holding company of Chengjian Donghua Company.
In April 2011, GuocoLand paid 3 billion yuan of APTECH’s debt to Agricultural Bank of China. GuocoLand believed that through such a debt purchase, it had become APTECH’s largest creditor and was entitled to ownership of the Guoson Center. APTECH disagreed.
Since then, APTECH and GuocoLand have gone to court several times, but the dispute is still unresolved, which has hampered Guoson Center’s ability to attract investment. The prime Dongzhimen location remains desolate.
An insider said that the Guoson Center project has been suspended for seven years and has accumulated a 15 million yuan utility bill. “Guoson Center covers a large area and professionals can tell it’s a huge loss-maker with a single glance,” the source said. “Both the investors and the government are worried about the project. It’s a pity such a good project is suspended due to a dispute. Now the government has no right to interfere and nothing can be done about it.”
An investor told the reporter that now GuocoLand China has lost confidence in the project. It talks with several companies about a transfer every year. Some think it’s still possible to solve the dispute and hold hope of winning the acquisition.
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