NWD Seeking Approval to Sell Shares to Raise $2.8 Billion

Shareholders of New World Development (NWD) in Hong Kong will vote on whether to preserve the company's "cash-cow" building business for long-term profitability or to sell it for an immediate special dividend. The property developer, which has one of the highest debt ratios among peers following a years-long development binge, might collect up to $2.8 billion from the sale of NWS Holdings to its largest shareholder as part of a buyout plan to help it reduce debt.

Top developers in the city have enjoyed decades of profitable returns in one of the world's most expensive property markets, but dropping prices and increasing interest rates are placing pressure on the industry.

Chow Tai Fook Enterprises (CTFE), which owns about 45.2 percent of NWD shares, has proposed to acquire approximately 97% of NWS stock for up to $4.5 billion, the parties said in June. To vote on the proposal, NWD will host an extraordinary general meeting at 11:30 a.m. (0330 GMT). The approval of more than half of the independent shareholders, excluding CTFE and NWD, is necessary.

To reward shareholders, NWD announced a special dividend of HK$4 billion ($511 million), or HK$1.59 per share, following conclusion of the transaction.

"The deal is good for NWD's shareholders because, first, the company's debt ratio will drop, and second, they will get a high special dividend," said Alvin Cheung, associate director of Prudential Brokerage Ltd in Hong Kong, who does not hold NWD shares.