CMB to spend reserves on property projects
Cash-rich China Motor Bus (CMB) still has HK$1.7 billion cash in hand even after the payout of HK$800 million in a special dividend to defend a hostile takeover in October.
Instead of 'sitting on the money and doing nothing', the company says it will use the remaining cash to finance property projects.
After yesterday's annual shareholders meeting, chairwoman Irene Ngan Kit-ling said the company was working on several property projects, including the redevelopment of its bus depot in Chai Wan and a property in Kam Hong Street, North Point, on which the right was originally granted to build housing for the company's employees.
The land use of the two properties is subject to modification as CMB lost its public bus franchise to First Bus in September 1998.
Ms Ngan said the company would negotiate with the government land premiums for the proposed redevelopments.
Among the projects, 'the Chai Wan project is going to take a reasonable amount of cash . . . so we are not just sitting here doing nothing', said newly appointed independent director Grahame Stoot.
CMB has a wealth of net assets since losing its public bus franchise, luring corporate raiders eager to liquidate its cash reserve and property portfolio.
This summer, investment bank Yu Ming offered CMB shareholders one HK cent a share plus a sum to be distributed from the company's cash reserve.
CMB defeated the hostile takeover attempt by recommending a special dividend of HK$18 cash a share.
It then exercised about 10 share repurchases, effectively boosting the holdings of the controlling Ngan family.
The family holds about 40 per cent of CMB.
Yesterday, Ms Ngan dismissed speculation the buybacks were aimed at enhancing the family's control. She said their effect was minimal because the shareholders' general mandate allowed the company to repurchase no more than 2 per cent of issued share capital.
