Hong Kong's Shui On Land, a major investor in China-based properties, said Wednesday it will pay off 875 million yuan (110 million dollars) in loans it received from Shanghai's troubled pension fund. The decision comes amid concerns that the company could be tainted by a growing scandal in Shanghai that involves politicians and executives in the alleged mismanagement of the city's billion-dollar pension fund.
"We know there are concerns in the market so we think it's best for us to just repay it," said Ronny Pang, Shui On Land's corporate communications chief.
In late August, Shui On Land, which has six projects across China, sought to distance itself from loans provided by the Shanghai Pudong Development Bank but that incorporated an entrustment arrangement with the Shanghai Social Security Fund.
"The loan agreement has been confirmed by our (Chinese) lawyers to be legal, valid and binding," said Vincent Loh, chairman and chief executive officer.
Loh was reacting to a government probe into the illicit investment of about 3.2 billion yuan (400 million dollars) from the pension fund in speculative real estate and highway deals that has ensnared some of Shanghai's top government officials.
The case, which emerged in July and has so far resulted in the firing of the head of the city's social security and labor bureau, along with a municipal district chief, has coincided with Shui On Land's efforts to raise cash.
Shui On Land is seeking to raise up to 6.8 billion Hong Kong dollars in a listing on the Hong Kong stock exchange this week, three months after it abandoned an earlier attempt, citing poor market conditions.
Pang said the company's decision to repay the Shanghai Pudong Development Bank loan was strictly a voluntary one and that it was now in discussions with commercial banks for new loans.
"We will basically take out another loan to pay off this one," said Pang, who insisted that business operations would not affect projects, such as its landmark Xintiandi, a ritzy entertainment and residential compound that is a favorite with locals and foreigners.
