Hong Kong Gateway Plaza Limited has received a ruling from the Supreme People’s Court of China to continue trial with regards to a litigation action brought before it by its purported creditors.
|Some investors in Mapletree Greater China Commercial Trust have expressed concern that the property could be liquidated to pay for damages. But MGCCT has reiterated that it is protected with an indemnity.|
Hong Kong Gateway Plaza was the owner of the Gateway Plaza in Beijing, a property now under the portfolio of Singapore-listed REIT, Mapletree Greater China Commercial Trust (MGCCT) (SGX: RW0U). The company has been brought to court by Beijing Bestride which is looking to recover a loan of RMB210 million it allegedly made in June 2007.
The ruling by Supreme People’s Court overturns an earlier mandate by the Beijing People’s Higher Court which dismissed the suit due to a lack of evidence by the plaintiff. The Supreme Court has since directed the Higher Court to continue trial.
The Gateway Plaza in Beijing is one of just two properties currently under the portfolio of Mapletree Greater China Commercial Trust. Some investors have expressed concern that the Gateway Plaza may be in danger of liquidation should the courts mandate that the sale of the property to be annulled such that the loan can be returned to the plaintiff in this on-going suit.
Mapletree Greater China Commercial Trust has reiterated that the seller of Gateway Plaza has provided it with an indemnity in relation to the litigation action. This point was made in the prospectus prior to its IPO this year and repeated again in an official company announcement yesterday. This indemnity is however subjected to limitations. The Manager for the REIT is working with its counsel in China on the next course of actions.
Units of MGCCT currently trade at S$0.89 on the SGX at, down 4.3 per cent from its IPO price of S$0.93 last February.