Shimao Services Says It Won’t Cut Deals With Parent for 6 Months
(Bloomberg) -- Shimao Services Holdings Ltd. said it won’t carry out any asset disposals with its property developer parent after a transaction earlier this month raised what JPMorgan Chase & Co. called a “corporate governance red flag.”
Shimao Services said in a statement to Hong Kong’s stock exchange late Friday that it “received a large number of feedbacks from independent shareholders” about Shanghai Shimao Co.’s Dec. 13 announcement regarding a connected transaction.
The announcement that Shanghai Shimao would sell property management assets to Shimao Services underscored increasing market worries that property managers are being used as a “financial tool” by developers, JPMorgan Chase wrote in a note at the time.
Shimao Group Holdings Ltd.’s credit rating has been slashed to junk territory from investment grade by Fitch Ratings. It had until recently appeared largely immune to the credit-market turmoil in China that led to defaults by junk-rated rivals including China Evergrande Group and Kaisa Group Holdings Ltd.
Shimao Group is China’s 13th biggest developer by contracted sales and among the largest property debt issuers with about $10.1 billion in outstanding local and offshore bonds.
Shimao Services also said in its exchange filing that it “is operating steadily,” and management is confident in its development.
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