Ind. Equity features in Hong Kong news

Press, 27 April 1983, Page 35

Ind. Equity features in Hong Kong news

NZPA Hong Kong A business newspaper columnist here has suggested that Hong Kong stock exchanges should revoke the listing of Industrial Equity (Pacific), Ltd, the Hong Kong investment company controlled by Mr Ron Brierley.

Writing in the business section of the English language “South China Morning Post” newspaper, Jim Walker describes I.E.L. (Pacific) as a poor illustration of Hong Kong stock exchanges and their past administration.

Moves are being made to merge the four independent exchanges into one unified Hong Kong stock exchange.

Mr Walker said the Securities Commission recently received a letter from Israel in which the writer inquired about the worth of two share certificates left by his father in a company called Shanghai Dockyards. “The short anawer is that, after some rigmarole, he is entitled to the same number of shares in Industrial Equity (Pacific), Ltd, as the company is now known,” Mr Walker said. “However, if this particular shareholder investigated further he would discover a history which is not a good illustration of Hong Kong’s stock exchanges and pur past administration.”

He explained that Shanghai Dockyards was a dormant company with its assets frozen in China and said to have frozen cash in the United States when Mr Brierley entered the scene in 1975. “It is said that Mr Brierley had several thoughts about the value of Shanghai Dockyards, including a good crystal ball that told him U.S.-China normalisation could be a possibility,” Mr Walker wrote.

He said that Mr Brierley set about turning Shanghai Dockyards into Industrial Equity’s Hong Kong company in a very straightforward way.

“The scheme was simple,” he said. “He had bought up a good percentage of the capital and was aware that many of the remaining shareholders would be lost in China.

“With that in mind, Industrial Equity then made three one-for-dne rights issues in the space of four years. “Of course, the lost shareholders were unable and

unaware of these issues and by underwriting them inhouse, Mr Brierley was simply watering down the interests of outside shareholders and increasing his own,” Mr Walker said.

'“Apart from that, Industrial Equity has done almost nothing locally and one wonders why, having made the mistake of allowing the issues in the first place, stock exchanges do not move to take the company off the lists.”

Mr Walker said the rights issues were not against the law and added that in all fairness to 1.E.L., the “lost” shareholders could probably never be found and were protected for a period in terms of dividends.

“Perhaps the most important matter now is that Industrial Equity should be seen to be an active company seeking opportunities for profit and dividend,” he said.

Industrial Equity (Pacific) recently reported an unaudited net loss of nearly |HK4 million (about ?NZ900,000) in the six months ended December 31, 1982.

The loss included $HK132,000 taxation and was largely blamed on an unrealised exchange loss of ?HK692,000 in respect of U.K. and U.S. currencies converted to Hong Kong dollars at prevailing rates. Mr Brierley said in his interim report that apart from that loss and increased interest charges, the company had “traded reasonably satisfactorily.” The net loss represented a deficit of 44.4 c on each one Hong Kong dollar share, and no interim dividend was declared. The directors of Industrial Equity (Pacific) are Mr Brierley (chairman), T. J. N. Beyer, W. M. Loewenthal and R. G. Seldon, according to the latest Hong Kong stock exchange yearbook. Nine million of an authorised 20 million shares (per value one Hong Kong dollar) have been issued.

In the yeaf ended June 30, 1982, the company reported a net profit after taxation of nearly ?HKI.6 million compared with nearly JHK4.S million in 1981-82. A dividend of 7c was paid. The company also paid dividends in 1979, 1980, and 1981. The shares rarely trade but have a nominal value of JHKI.73. No sales have been recorded this year.