Terry Hui is
adamant he has been misunderstood. Earlier this month, the chief executive
of Concord Pacific Group Inc. offered to buy all the outstanding shares of
the property developer for $1.70 each, even as the shares were trading at
close to $3.
Mr. Hui called it a courtesy bid, noting
in April he agreed to buy 37% of the shares from a group of major Hong Kong
stakeholders at that price.
Nonetheless, the lowball offer has left
some investors dismayed and set off rumours Mr. Hui is planning to take the
company private.
"Some people have mentioned the
taking-private thing," Mr. Hui said in an interview with the Financial
Post. "But we have not initiated steps to take the company private, so
it's not true."
But some industry observers are not so
sure.
Concord Pacific achieved renown by
acquiring two of the largest and most valuable chunks of urban real estate
in the country. The crown jewel is Concord Pacific Place in Vancouver, a
massive $3-billion development on the old Expo 1986 lands. When completed --
the multi-phased project likely has another 10 years to go -- the 206-acre
site will contain more than 50 office towers and condominiums.
The other jewel is a slightly smaller
project in Toronto's railway lands near the CN Tower, where Mr. Hui's
company is putting up a $1.5-billion complex slated to include 20
condominium towers housing as many as 12,000 people.
"The Toronto project is just getting
going, but it's huge," said Harry Rannala, an analyst at Raymond James.
"They've been successful in both markets. The land itself is extremely
well located, right beside the water."
In both cases, Mr. Rannala said,
Vancouver-based Concord Pacific has been prudent. Instead of borrowing
massive amounts of capital to finance its plans, it is selling the units
before building them. It is also being cautious in its construction
schedule, never overloading the market with units at any one time. Such
practices mean that return on investment is spread out over time -- about
two decades -- but it isn't unduly jeopardized by fluctuations in the
market.
The son of Hong Kong K.M. Hui, who
made his fortune in taxis and real estate, Terry
Hui earned a master's degree in electrical engineering at Berkeley.
He came to Canada in 1985. Two years later, Li Ka-shing, the Hong Kong
billionaire who has a majority stake in Husky Energy Inc., set up Concord
Pacific, through which he acquired Vancouver's Expo lands from the
provincial government. The company is part of a network controlled by the Li
and Hui families.
Property companies frequently turn to the
public markets to raise financing. The trouble is, they sometimes have
difficulty convincing investors of their value. Because of the nature of the
business -- earnings tend to come in lumps as buildings are sold -- share
prices can be lacklustre.
"Land companies tend to be heavily
discounted in the market," Mr. Rannala said. "It's only when you
can prove a continuous stream of earnings that investors can be persuaded to
pay for it."
Concord Pacific's shares have been
climbing, partly because of the company's recent positive financial results.
On Friday, they closed at $2.75, up 5¢. But the rising price may be of
limited importance to the company.
According to Mr. Rannala, most of the
financing for the major projects is already in place.
"Mr. Hui really doesn't need the
benefit of other investors," Mr. Rannala said. "So it comes down
to a question of what does it cost to buy out the other shareholders? That
is, ultimately, the million-dollar question."
Through his privately held Adex
Securities Inc., Mr. Hui acquired 37% of the shares of Concord Pacific in
April, including the 15.9% stake held by Mr. Li. Combined with his father's
holding, that gives Mr. Hui a 62.5% block of the shares.
The reason his recent share offer
seems low, Mr. Hui said, is because the original deal with the big
shareholders was put together some months ago, when the shares were trading
low. "It takes a lot of time to do the paperwork [and in the meantime]
the shares run up," he said, adding he doesn't expect a rush of
interest any time soon. "If people tender their shares, sure I'll buy
them." - 21 May 2002 National
Post
By John Greenwood
Adex Securities Inc. entered into
agreements to buy 12.3 million common shares of Concord Pacific Inc. for
$1.70 each. The shares represent 37% of the issued and outstanding common
shares of Concord. The agreements are with a subsidiary of Li Ka-shing
Group's Hutchison Whampoa Ltd., Comasia Ltd., Polygrade Ltd. and Long
Cheer Ltd. The transactions are to be completed on or before June 26,
2002. Terence Hui, the president and CEO of Concord, is a director and sole
shareholder of Adex Securities. Adex Securities is also considering making a
$1.70-a-share bid to all shareholders of Concord through a tender offer.
Concord chief boosts
stake to 46 per cent
Considering bid for rest
of developer
Terry Hui, the president and chief
executive officer of Concord Pacific Group Inc., has raised his holding in
the real estate developer to 46 per cent.
And he said yesterday he is considering
making an offer of $1.70 a share for the rest of the Vancouver-based
company.
Several fund managers seemed perplexed by
Mr. Hui's proposed offer, and that confusion appears to have spooked the
market. Concord Pacific's share price dropped by 20 cents yesterday, closing
at $1.75 on the Toronto Stock Exchange.
The fund managers pointed out that Mr.
Hui's proposal was well below the current trading value of Concord Pacific
on the TSE. It is also less than half the book value of the company, which
one manager estimated at $4.30.
The managers also pointed out that Mr.
Hui is floating his idea a few weeks before Concord Pacific starts to roll
out a major development in Toronto that is expected to make a substantial
profit for the company.
Concord Pacific "will have 1,700
[condominium] closings this year," said Tim McElvaine, chief investment
officer for Cundill Group of Toronto, which holds about 9.5 per cent of the
shares outstanding. "That could add earnings of $1 a share."
Concord Pacific is developing Concord
Pacific Place in Vancouver, a network of 60 condominiums, office towers and
retail plazas that has been described as the largest urban development site
in North America.
It is also poised to sell the first
condominiums in the railway lands development in Toronto.
"I've no idea what [Mr. Hui is]
doing," one fund manager said yesterday.
Another declined to comment. "It's
too early to speculate on what Mr. Hui is doing," she said.
The events were set in motion by a news
release announcing the deal in which Mr. Hui, though his Adex Securities
Inc., will buy out the four Hong Kong companies that currently hold a
37-per-cent position in Concord Pacific, giving him and his family a
46-per-cent stake.
The sellers include Hutchison Whampoa
Ltd., a holding company owned by Hong Kong magnate Li Ka-shing that holds 16
per cent of the shares outstanding, and three unrelated companies.
Mr. Hui then announced that he "is
considering making a $1.70-per-share bid to all shareholders through a
tender offer."
And that's when the other shareholders
started to scratch their heads.
"All shareholders will rely on
the board to reflect carefully on an underlying value of over $4 a
share," Mr. McElvaine said. "If there's a public offer, the board
will have to give its opinion." - April
5, 2002 Globe
& Mail
Terry Hui, the Concord Pacific president,
CEO and putative majority shareholder, and Arthur Erickson are reportedly in
final negotiations to have the feted architect design a landmark tower for
False Creek North. Expect an announcement within two weeks for an ultra-posh
condo development slap-dab on the waterfront. Erickson's name and reputation
should add cachet to million-dollar-plus buyers who would otherwise have to
visit Saudi Arabia to see the architect at his latter-day monumental best.
- by Malcolm Parry Vancouver
Sun
24 May 2002
