A company that Shimao Property Holdings Ltd.'s Shanghai Shimao Jianshe Co. Ltd. subsidiary is planning to buy as part of a nearly 2.33 billion-yuan deal is being sued by Xi'an Lijun Real Estate Development Co. Ltd. in the People's Court of Weiyang District in Xi'an, China.
The civil action is related to the aforementioned deal, which would give the Hong Kong-listed developer control over two sites in Xi'an with a combined area of about 468,782 square meters. Xi'an Lijun is a vendor in the agreement and an owner of Shanxi Kaicheng Industry Co. Ltd., the defendant.
Shanxi Kaicheng is being sued for allegedly canceling a resolution approving the transfer of its 7.5% stake to Shanghai Zhenxiao Enterprises Management Co. Ltd., a joint venture of Shimao Property, from Shanxi Shengda Petroleum Co. Ltd. The resolution also approves the proposed changes to Shanxi Kaicheng's board.
Shanghai Zhenxiao, which was also named as a third-party to the case, is seeking legal advice in relation to the lawsuit, Shimao Property noted.
In addition, the developer said it is yet to complete the transaction due to certain disagreements over commercial terms of the deal. As of May 18, Shanghai Shimao and Shanghai Zhenxiao respectively paid an estimated 1.00 billion yuan and 614.8 million as part of the consideration for the transaction.
As of May 18, US$1 was equivalent to 6.38 yuan.