SHENZHEN, China, Sept. 23, 2020 /PRNewswire/ -- Nam Tai
Property Inc. ("Nam Tai" or the
"Company") (NYSE Symbol: NTP) today issued the following release in
response to numerous false and misleading statements made by IsZo
Capital Management LP ("IsZo") in its recent communications to
Nam Tai shareholders. The
Company also noted that it is working with its advisors and legal
counsel to evaluate IsZo's purported request to call a special
meeting of shareholders and will respond in due course.
The Nam Tai Board of Directors and management team are committed
to acting in the best interests of the Company and all Nam Tai shareholders, and are receptive to ideas
that advance the Company's goal of enhancing shareholder value.
However, in its recent letters, IsZo, a shareholder seeking to take
control of the Nam Tai Board of Directors, has made a number of
false and misleading allegations and assertions about Nam Tai in support of its opportunistic
campaign. The Company is eager to present the facts and set the
record straight about these misstatements.
Among the most glaring examples of IsZo's false and misleading
claims are the following:
IsZo has made numerous false claims regarding Nam Tai's relationship with Kaisa,
including:
- "Kaisa has a well-documented and highly-publicized record of
defaulting on financial obligations, mistreating investors and
facing legal issues in the People's
Republic of China."[i]
- "In 2015, Kaisa's stock price plummeted amidst allegations of
corruption by the Kwok brothers. The Shenzhen government froze all of Kaisa's
assets, its stock was delisted from the Hong Kong exchange, and the brothers fled to
Hong Kong to escape detention by
the PRC authorities…"[ii]
- "The startling number of related-party transactions alone
should raise alarm of self-dealing."[ii]
THE FACTS: THE STRATEGIC RELATIONSHIP WITH KAISA WILL
SUPPORT LONG-TERM DEVELOPMENT
In its letters, IsZo makes a number of misrepresentations and
inaccurate statements about Kaisa Group Holdings Ltd. ("Kaisa"),
the Company's largest shareholder and a significant strategic
partner. By way of background, Kaisa is listed on the main board of
the Hong Kong Stock Exchange (the "HKEX") with a market cap
exceeding $3.3 billion and is a
large, diversified investment group in China, with competitive advantages in real
estate development and urban renewal, among others. Importantly, as
a large and long-term oriented shareholder, Kaisa's interests are
aligned with all Nam Tai
shareholders, and its relationship with Nam
Tai provides the Company with not only branding advantages,
but also increased access to bank financing and operational
support. In the field of urban renewal, Kaisa is constantly
regarded as one of the national leaders. As of June 30, 2020, Kaisa had 167 urban renewal
projects covering a site area of nearly 42 million square
meters, the majority of which are in Guangzhou and Shenzhen, which are also key markets for
Nam Tai. Notably, Kaisa is one of
the top developers in Shenzhen,
and in 2019, contracted sales attributable to Kaisa reached
approximately $12.9 billion.
- With respect to IsZo's claims about Kaisa's share price and
stock listing, the fact is that Kaisa's stock was only suspended
from trading, not "delisted". IsZo not only gets this history
wrong, it also fails to mention that Kaisa resumed trading on the
HKEX in March 2017, and was cleared
of all allegations and rumors of any wrongdoing. IsZo also fails to
mention that Kaisa's share price reached a two-year high in
September 2020, demonstrating the
market's confidence in the company despite the impacts from
COVID-19 and volatile economic conditions. Kaisa is credited with
an issuer's rating of "B1" by Moody's.
- With respect to IsZo's accusatory claims against Kaisa and its
Chairman Mr. Ying Shing Kwok, it is
important to note that Kaisa was named "One of the Most Respected
40 Listed Companies" and Mr. Kwok was named "One of the Most
Respected 40 Entrepreneurs" by Securities Times, the premier media
outlet of record for news and information regarding listed
companies designated by China Securities Regulatory
Commission.
- With respect to IsZo's claims regarding "self-dealing", it is
again important to consider the facts. From a business standpoint,
Nam Tai and Kaisa engage on numerous
matters, including property management agreements. For example,
following a competitive bidding process, Nam Tai selected the lowest bid, Kaisa
Prosperity (SEHK: 2168), as its outsourced property management
service provider. Kaisa Prosperity's expertise and local market
knowledge provides Nam Tai with a
cost effective and high-quality solution. The Company maintains
full transparency in all of its engagements with Kaisa, including
disclosure of current and anticipated fees paid to Kaisa in its
most recent annual report on Form 20-F (the "2019 20-F"). As
disclosed under the "Related Party Transactions" of Nam Tai's annual report for fiscal 2019 on Form
20-F, the sum that Nam Tai is
expected to pay to Kaisa in 2019 to 2021 under existing contracts
is expected to be no more than RMB 20
million (less than US$3
million in total, or US$1
million per annum on average).
In addition, it's important to consider the potential
detrimental impact to Nam Tai and
all shareholders as a result of IsZo's reckless and misinformed
campaign. For example, following the resignation of Mr.
Ying Chi Kwok, Nam Tai's
lending banks expressed concerns that our relationship with Kaisa would be weakened.
In fact, it is difficult for small real estate companies to obtain
bank financing in China. If the
Board were to lose its relationship
with Kaisa, which would be the case if IsZo's majority slate of
nominees were elected to the Nam Tai Board, it would run the risk
of loans being canceled, while also severely limiting the Company's
ability for future fundraising, consequently leading to significant
liquidity issues with its operating and construction works.
Importantly, Nam Tai's relationship
with Kaisa provides it with access to bank financing and favorable
rates for its industrial land redevelopment projects, none of which
was possible prior to Kaisa's significant strategic investment in
Nam Tai. The requisition notice and
further actions related to potential change in control pursued by
IsZo may even trigger an early repayment of outstanding loans
demanded by the banks under relevant loan covenants. This is a
significant risk to our business that all shareholders should
consider before supporting IsZo's campaign.
IsZo has made numerous false claims about Nam Tai's stock performance,
including:
- Nam Tai's stock "has also
significantly underperformed its industry peers along with the
broader stock market based on a variety of metrics."[ii]
- "The Company's stock price is trading at just $4.05 per share for a total market capitalization
of less than $160 million as of
yesterday's close – a 70% decline in share value since Kaisa
replaced NTP's former CEO with Mr. Ying Chi
Kwok, the younger brother of Kaisa's CEO, on January 29, 2018."[ii]
THE FACTS: NAM TAI'S
STOCK HAS OUTPERFORMED SINCE KAISA'S INVESTMENT
IsZo has attempted to show that Nam
Tai's share price has been negatively impacted since Kaisa's
investment. The facts show that this assertion is plainly false.
The last closing price of Nam Tai's
stock before Kaisa announced it was going to acquire a stake
in the Company was $8.20. On the day
of the announcement of the investment on July 12, 2017, the share price closed at
$10.00. Of course, when IsZo issued
its letter in May 2020, the market
was suffering from the aftermath of one of the most significant
market dislocations in recent history as a result of the COVID-19
pandemic. Importantly, when looking at the full time period
starting with Kaisa's investment in July 12,
2017 until September 21,
2020, Nam Tai has
outperformed not only the Russell 2000 but also the two other major
US-listed Chinese property developers, China HGS and Xinyuan Real
Estate.
Clearly demonstrating its lack of understanding of the
Chinese real estate market and our development portfolio, IsZo
makes unsubstantiated and misleading claims regarding Nam Tai's capital allocation and project
development strategy, including:
- "The most recent example of the Company's poor capital
allocation strategy is the purchase of a $101 million residential development in
Dongguan City using over 80% of
the Company's cash. If the Company continues to recklessly deploy
capital while ignoring opportunities to monetize existing assets,
the Company's intrinsic value will be in jeopardy."[ii]
- "On March 23, 2020, the Company
revealed in a single, buried sentence in its over 100 page 20-F
filing that it purchased a $101
million site for residential development in Dongguan City."[ii]
THE FACTS: NAM TAI IS
FINANCIALLY AND STRATEGICALLY ALLOCATING CAPITAL TO HIGH-QUALITY
LAND RESOURCES AND ITS ACTIONS ARE FULLY ALIGNED WITH ITS
SHAREHOLDER INTERESTS
The Nam Tai Board has a strong track record of strategic
foresight and sound decision-making regarding the Company's
portfolio of assets. Nam Tai is a
disciplined investor, focused on maintaining an efficient cost
structure and executing a prudent capital allocation strategy.
Nam Tai's Board and management team
are committed to driving value and shaping the Company into a
leading industrial ecosystem operator with a clear development
strategy, including prudently managing financing and control costs
and proactively investing in high-quality land resources. The Board
has invested significant time and resources to position the Company
to effectively take advantage of market opportunities and produce
sustainable returns for shareholders, including pursuit of
strategic development opportunities in the Guangdong-Hong Kong-Macao Greater Bay Area.
The Company's investment in a land parcel in Machong Town,
Dongguan is an example of this
approach in practice.
Consider the facts:
- Dongguan has been designated a
leading advanced manufacturing hub in the region by the Chinese
government while Machong is one of the fastest growing areas in
Dongguan with the presence of a
number of China's top 500
companies and strong local housing demand. In fact, residential
prices in 2020 have hit record-highs in Shenzhen and nearby cities.
- The Company carried out a comprehensive and rigorous
assessment, conducted land surveys and surrounding market research
in the local area before the land investment in Machong. We believe
that this represented an attractive investment opportunity, and the
favorable property market policies introduced by the local
government at that time were conducive to our bidding.
- As disclosed under the "Capital Resources" section of our 2019
20-F, as of December 31, 2019,
Nam Tai entered into various
agreements with five banks and obtained a total credit line of
$298.9 million, of which $ 98.0 million has been withdrawn. Furthermore,
with pre-leasing of the first development project of Nam Tai Inno
Park underway, the Company was and is generating cash flow.
Contrary to IsZo's assertions, the Company's financial position
remained strong even after the acquisition. Nam Tai's current ratio and debt ratio was 1.25X
and 50.1%, respectively, as of December 31,
2019. After the successful bidding and settlement of the
land payment, as of the end of June
2020, our current ratio and debt ratio were maintained at a
healthy level of 1.23X and 57.5%, respectively. This reflects that
this investment, as we planned, did not compromise the Company's
financial conditions.
- Contrary to IsZo's claims, in addition to the disclosure
related to the Dongguan investment
in its 2019 20-F, the Company issued and made available on its
website a dedicated release regarding the investment on
March 25, 2020. Because the auction
hosted by the local government for the Dongguan land parcel took place just a few
days before the 2019 20-F was released, the Company felt it was
prudent to initially disclose the investment in its 2019 20-F and
follow up with a more fulsome release shortly thereafter. Of
course, IsZo conveniently fails to mention the Company's follow-on
disclosure.
This strategic investment is expected to produce attractive
returns for the Company's shareholders, and also help Nam Tai expand to Dongguan, a key growth potential city in the
Greater Bay Area, grow the Company's residential and commercial
property portfolio, create powerful synergies with other existing
projects in the nearby Shenzhen,
form new relationship networks within the local communities and
enhance brand awareness in Dongguan and Guangzhou.
This acquisition also leverages on the proven ability of
Nam Tai to control project costs.
For instance, the planned development cost of Nam Tai Inno Park has
been significantly reduced by approximately $117 million from the original budget of
$312 million, yielding substantial
benefits for the Company.
IsZo has made numerous false and misleading allegations
about the valuation of Nam Tai
shares and its project portfolio, including:
- "Two years ago, before any pre-sales or revenue, the Company's
two commercial projects had three independent valuations ranging
from $2 to $3
billion, implying a share price between $15 and $23 per
share. Indeed, Kaisa itself purchased its shares in the Company for
over $17.00 per share in July 2017. Based on comparable raw land
valuations alone, the stock should be trading higher than
$20 per share."[ii]
- "Nam Tai's most recent valuation
reports imply that its project portfolio is worth up to
$40 per share, which is approximately
4x the Company's current share price."[i]
THE FACTS: ISZO'S PURPORTED VALUATION ESTIMATES ARE
WRONG AND LACK GROUNDING IN ANY CLEAR METHODOLOGY
Despite IsZo's attempts to characterize Nam Tai's portfolio valuation over the years,
such range of share prices is not mentioned in the valuation
reports and could also not be reasonably inferred from the reports.
Further, IsZo's previous target share price based on the valuation
reports was between $15 and
$23, contradicting to $40 indicated in this statement. IsZo has
provided no valuation methodology at all.
In April 2018, when the
construction of Inno Park was starting and the redevelopment of
Inno City (now renamed to Nam Tai Technology Center and
Inno Valley) had not yet commenced,
the valuation reports of JLL, Savills and DTZ assigned a total land
value for the two commercial projects at, approximately,
$505 million, $788 million and $685
million, respectively. However, these valuations relied on a
host of varied and complex assumptions, some of which were later
found to be inadequate. Rules governing the redevelopment of
industrial land projects in Shenzhen have been evolving. Since 2017, and
in contrast to the current residential market, the market for
re-developed industrial land projects in Shenzhen has also been deteriorating with
industrial office space in over-supply and dormitory sale and
leasing subject to escalating restrictions. Furthermore, IsZo's
previous target share price based on the valuation reports was
between $15 and $23, contradicting to $40 indicated in the above statement from its
September 18, 2020 shareholder
letter. Again, no valuation methodology is provided.
IsZo falsely claims the Nam Tai Board Members lack
independence and are unqualified, for example:
- "The sixth director, Dr. Wing Yan
Lo, is a career non-executive director who has served as a
director of over 45 companies, whose share value, on average,
declined more than 25% during his board tenure. While we do not
know his exact affiliation with Kaisa, Dr. Lo's performance has
indicated that he is mere rubber stamp for Kaisa's decision
making."[i]
THE FACTS: THE NAM TAI BOARD AND NEW LEADERSHIP TEAM
COMPRISES INDIVIDUALS WHO HAVE BROAD AND DIVERSE EXPERIENCE AND ARE
COMMITTED TO EFFECTIVE, INDEPENDENT OVERSIGHT TO LEAD NAM TAI ON
ITS NEXT PHASE OF GROWTH
Nam Tai is at an important
junction in its history with a number of development milestones and
potential value drivers anticipated in the near- and mid-term. To
capitalize on the opportunities ahead, the Company has appointed
new leadership, including a new Executive Chairman, Chief Executive
Officer and Chief Financial Officer. Together, these appointments
strengthen our leadership team and position the Company well for
its next phase of growth.
Collectively, the Company's Board and management team are
engaged in overseeing the Company's strategic direction and
operational execution for the interests of all shareholders.
Nam Tai's Board has the right
expertise and is best-positioned to hold management accountable and
guide the Company to success.
The Board is composed of seven members, six of whom are
independent, with members from North
America and China who
collectively bring significant expertise in areas that are critical
to the Company's business, including deep knowledge of the Chinese
real estate market, international perspective, local government and
regulatory affairs and capital allocation and finance.
Given the importance of its portfolio, Nam Tai's Board appreciates the need for real
estate expertise representation on the Board. In its letters, IsZo
even goes as far as to paint Dr. Wing Yan
Lo as an unqualified director lacking independence.
Nam Tai's Nominating and Governance
Committee evaluated Dr. Lo's qualifications, which is especially
important because the Board is entrusted by shareholders with
providing oversight, guidance and credibility to our Company,
employees and tenants. Contrary to IsZo's false claim, Dr. Lo a
respected business figure and philanthropist in Hong Kong, who has held various senior
executive positions and directorships in renowned companies.
Indeed, Dr. Lo is one of the longest serving directors of
Nam Tai, who has been on the Board
since 2003.
The Board and the management team, through their extensive
experience in the Chinese market and real estate industry, are
implementing differentiated strategies to accelerate business
growth and create value for shareholders. This has included
unleashing the value of existing projects, providing tenants with
innovative, high quality industrial space, prudently managing
financing and control costs and exploring development opportunities
in the Guangdong-Hong Kong-Macao
Greater Bay Area. The sum of these efforts and our progress to-date
reinforce the value creation opportunity for Nam Tai and our shareholders. The Board is and
has been central to the successful implementation of Nam Tai's strategy, and is committed to
enhancing value for all shareholders. The removal of any of the
Board's directors would risk derailing the Company at a key
inflection point.
IsZo is mischaracterizing Nam
Tai's recent management changes.
- "Shareholders should be outraged that Nam Tai has exacerbated its dismal corporate
governance and laid the groundwork for more conflicts of interest
by appointing three Kaisa-affiliated individuals – Dr. Lai Ling Tam, Jiabiao Wang and Wai Hang Wan – to the roles of Executive
Chairman, Chief Executive Officer and Chief Financial
Officer."[iii]
THE FACTS: SUCCESSION PLANNING HAS ALWAYS BEEN A TOP
PRIORITY FOR OUR BOARD OF DIRECTORS AND IT HAS BEEN A PART OF AN
ONGOING DIALOGUE.
Contrary to IsZo's claims, Dr. Tam, Mr. Wang and Mr. Wan were
appointed because of their experience, industry knowledge and
proven track records of success. The Company is excited to
have Dr. Tam, Mr. Wang and Mr. Wan are three experienced leaders
who are each ideally suited for their new roles, ready to step in
and lead the Company at this important time in our history.
IsZo misleadingly claims that its own candidates have the
requisite experience to deliver value to shareholders, for
example:
- "IsZo's slate of director candidates has the right strategy for
unlocking the significant upside value trapped within Nam Tai's shares."[i]
THE FACTS: ISZO AND ITS CANDIDATES HAVE PRESENTED NO
CREDIBLE PATH FOR HOW THEY WILL CREATE VALUE AND LACK THE
EXPERIENCE AND QUALIFICATIONS TO LEAD NAM TAI OR ANY REAL ESTATE
COMPANY.
It is clear that IsZo lacks a clear understanding of the
Company's strategic plan and project value, and that its nominees
lack the in-depth knowledge and extensive experience required to
successfully operate large-scale industrial real estate and urban
renewal projects in China.
Evidence of this comes from release of IsZo's "plan" on
September 18, 2020, which essentially
amounts to an admission that states that it will need to hire and
install an entirely new management team based in China, ostensibly to bolster the lack of local
market knowledge and China real
estate development expertise of its director
candidates. Further, IsZo has already publicly wedded its
supposedly independent nominees to implementing its recently
disclosed "plan", which lacks specific detail, is untested and
highly speculative. Despite this fact, IsZo is asking shareholders
to hand over control of the Board to a minority shareholder and its
hand-picked nominees with no payment of a control premium and no
proven ability to execute complex real estate development projects
in China.
* * *
Nam Tai believes that IsZo is
attempting to derail its significant progress and gain control of
the Board at the expense of all Nam
Tai shareholders. The Nam Tai Board and management team
urges its shareholders to not be distracted by the steady drumbeat
of false and misleading allegations made by IsZo. The Company is at
a crucial moment of its development that calls for an experienced
Board with a clear strategy, the right expertise and local market
knowledge to lead.
[i] IsZo Capital
letter to shareholders dated September 18, 2020
|
[ii] IsZo Capital
letter to shareholders dated May 27, 2020
|
[iii] IsZo Capital
press release dated September 22, 2020
|
Forward-looking Statement and Factors that Could Cause our
Share Price to Decline
Certain statements included in this press release, other than
statements of historical fact, are forward-looking statements.
Forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may", "might", "can",
"could", "will", "would", "anticipate", "believe", "continue",
"estimate", "expect", "forecast", "intend", "plan", "seek", or
"timetable". These forward-looking statements, which are subject to
risks, uncertainties, and assumptions, may include projections of
our future financial performance based on our growth strategies and
anticipated trends in our business and the industry in which we
operate. These statements are only predictions based on our current
expectations about future events. There are several factors, many
beyond our control, which could cause results to differ materially
from our expectation. These risk factors are described in our
Annual Report on Form 20-F and in our Current Reports filed on Form
6-K from time to time and are incorporated herein by reference. Any
of these factors could, by itself, or together with one or more
other factors, adversely affect our business, results of operations
or financial condition. There may also be other factors currently
unknown to us, or have not been described by us, that could cause
our results to differ from our expectations. Although we believe
the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance, or achievements. You should not rely upon
forward-looking statements as predictions of future events. These
forward-looking statements apply only as of the date of this
announcement; as such, they should not be unduly relied upon as
circumstances change. Except as required by law, we are not
obligated, and we undertake no obligation, to release publicly any
revisions to these forward-looking statements that might reflect
events or circumstance occurring after the date of this press
release or those that might reflect the occurrence of unanticipated
events.
ABOUT NAM TAI PROPERTY INC.
We are a real estate developer and operator, mainly conducting
business in Mainland China. Our main land resources are located in
the Guangdong-Hong Kong-Macao
Greater Bay Area ("Greater Bay Area") and Wuxi, China, of which the three plots in
Shenzhen will be developed into
Nam Tai Inno Park, Nam Tai Technology Center and Nam Tai Inno Valley. We plan to build these
technology parks into landmark parks in the region and provide
high-quality industrial offices, industrial service spaces and
supporting dormitories to the tenants. Based on the experience of
developing and operating technology parks and an industrial
relationship network accumulated over the past 40 years, we have
also exported the operation model of technology parks to other
industrial properties. Through an asset-light model, we have leased
industrial properties for repositioning and business invitation. We
will also expand the commercial and residential property business
in China as an auxiliary
development strategy of the Company. As the growth prospects of
China maintain, we shall seize
development opportunities in the Greater Bay Area and other first-
and second-tier cities in China,
and continue to strengthen and expand the business of industrial
real estate, and commercial and residential properties. Nam Tai
Property Inc. is a corporation registered in the British Virgin Islands and listed on the New
York Stock Exchange (Symbol: "NTP"). Please refer to our corporate
website (www.namtai.com) or the SEC website (www.sec.gov) for our
press releases and financial statements.
Contacts
Ed Trissel / Amy Feng / Mahmoud
Siddig
Joele Frank, Wilkinson Brimmer
Katcher
212-355-4449
Namtai-jf@joelefrank.com
Investor Relations Department
Nam Tai Property Inc.
E-mail: ir@namtai.com.cn
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SOURCE Nam Tai Property Inc.