Eldest son loses out in SHKP trust rejig

HONG KONG: In the latest twist in the high-profile family feud at the Sun Hung Kai Properties (SHKP) empire, Walter Kwok Ping-sheung — eldest scion of the Kwok clan — has been removed as a beneficiary from a key trust controlling the business group.

According to the company's disclosure to the stock exchange, the trusts owned 42.42% in SHKP as of September last year. A third of the shareholding of the trust is now held for the benefit of "Walter Kwok's family", not Walter Kwok and his family.

Walter's brothers, Thomas Kwok Ping-kwong and Raymond Kwok Ping-luen, will each be beneficiaries of a third of the trust along with their families.

An announcement issued by SHKP last night on behalf of chairwoman Kwong Siu-hing, saw the 81-year-old matriarch of the Kwok family exclude her eldest son in a reorganisation of the family trusts that hold a controlling stake in the HK$348.75 billion (RM139.5 billion) empire.

"The reorganisation is an internal exercise to continue and maintain the family's interests in the company," according to the statement.

Although SHKP did not elaborate on the new arrangement, people familiar with the company said Walter Kwok would now not be a direct beneficiary, although his children still were.

"It was Madam Kwong's decision to launch the reorganisation," one said. "The beneficiaries of the trusts are restricted from selling their shares in the open market."

However, Walter Kwok issued a statement late last night saying that he and his family, together with his two younger brothers and their families were still beneficiaries of the trust and their shareholding interests were the same.

Kwong, who ousted her eldest son as chairman in May 2008 amid a high-profile family dispute over control of the empire, remains beneficially interested in the trusts and in the whole shareholding interests of the company. She is the largest shareholder in the empire founded by her late husband, Kwok Tak-seng.

"This is an unfriendly move. It is an arrangement to prepare for Mrs Kwok's future departure" from the company, Li Kwok-suen, a fund manager at Phillip Capital Management, said. "As an investor, I see this is an acceptable proposal as the picture is clearer."

Paul Louie, an analyst at Nomura International (HK), said it was a positive note for investors.

"It will be more transparent as no one knew the succession plan. The firm's daily operation will definitely be unaffected by the reorganisation of the trust," he said.

SHKP shares rose to a 52-week high of HK$135.70 before yesterday's announcement.

Walter Kwok's ousting as chairman was a highly public dispute, replete with charges of mismanagement, questions about the undue influence of a female friend, accusations that he suffered from a psychological disorder, media leaks and court injunctions.

SHKP's boardroom battle is unrivalled in Hong Kong's recent corporate history in terms of drama, intrigue and acrimony.

The family feud has cast a shadow over the company and raised concerns about the opaque succession plans at other family-controlled companies in the city. -- South China Morning Post