Acquisition of The Center in Hong Kong

By Raymond Cheung, ONC Lawyers
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ONC Lawyers served as legal counsel for C.H.M.T. Peaceful Development Asia Property Limited (C.H.M.T.), the purchaser in the acquisition of The Center from Li Ka-shing’s CK Asset Holdings at a record price of HK$40.2 billion. The Center is the fifth tallest skyscraper in Hong Kong, and is one of the few skyscrapers in Hong Kong that is entirely steel-structured with no reinforced concrete core. The Batman movie “The Dark Knight” was also shot on location in the lobby.

张国明-RAYMOND-CHEUNG-柯伍陈律师事务所-合伙人、公司及商业部门主管-Partner-Head-of-Corporate-&-Commercial-ONC-Lawyers-2
RAYMOND CHEUNG
Partner
Head of Corporate & Commercial
ONC Lawyers

The deal was structured as the acquisition of The Center (Holdings) Limited, the owner company which, through a group of 52 subsidiaries, held a majority interest in The Center. The whole process started back in 2016 and we were involved in the extensive legal due diligence of a large volume of corporate documents and title deeds, the drafting and finalizing of the transaction documents all the way up to completion, which finally took place in May 2018. During the process, we had intense liaison with more than ten legal firms, three accounting firms, two tax advisers, three British Virgin Islands (BVI) legal firms, corporate services providers, valuers, property management companies, architects and surveyors.

One of the major challenges that we faced arose from the change of shareholding structure of C.H.M.T. As circumstances evolved and changed throughout the transaction process, the shareholding of C.H.M.T. changed from a single shareholder to a consortium made up of some of the Hong Kong’s most influential families, each of them with a different investment perspective and risk appetite. As such, we were also involved in the drafting and finalizing of the shareholders agreement of C.H.M.T., aligning the interests of each member of the consortium while taking into account their specific needs. We have also advised the consortium on property matters including the property management and naming right of The Center, and the mechanism for allocating the different properties of The Center to members of the consortium after completion.

Another complexity of this deal lies in the related financing. Given the size of this deal and the tightened measures for property financing imposed by Hong Kong regulatory authorities, the consortium opted for a US$4.1 billion global bond issuance arranged by leading investment banks. Structuring such a complicated and global bond issuance is neither an easy nor a straightforward task. We had to ensure that the completion mechanics of this deal fits in the closing timetable of the bond issuance, and that cleared funds in such large amount would be received by the seller on completion without any obstruction. This required extensive liaison and co-ordination among all working parties involved. We had also devised the structure for disposal of any part of The Center post-completion to ensure that the interests of the consortium would be well taken care of but at the same time in full compliance with the restrictions imposed by the terms of the note issuance.

Established in 1992, ONC Lawyers has grown to become one of the largest domestic law firms with more than 150 members of legally-qualified and supporting staff. The deal mentioned in this article has received a number of awards, including the “Deals of the year 2018” by China Business Law Journal.

onc_lawyers_logoRaymond Cheung is a partner and head of corporate & commercial at ONC Lawyers. He can be contacted on+852 2107 0347 or by email at raymond.cheung@onc.hk