Published March 6, 2009

Beauty China chairman still owes $800,000

By LYNETTE KHOO

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BEAUTY China chairman and founder Wong Hon Wai still owes $800,000 after the forced sale of his mortgaged shares on Tuesday and Wednesday that cut his stake in the company to 32.28 per cent.

Mr Wong: Talks to sell his entire stake scheduled to end by next Friday

And this outstanding amount could be settled through further sales of his mortgaged Beauty China shares, the company said in a filing with the stock exchange yesterday.

Mr Wong's stake is held through his investment holding firm Lucky Gain International, which had pledged all of the shares to obtain credit facilities.

'The balance pledged shares of Lucky Gain will be released from all encumbrance after the amount outstanding has been repaid or satisfied through forced sale,' Beauty China said.

'The company is mindful to monitor its share price and trading volume and will release further announcements and update if necessary.'

The latest disclosure on Mr Wong's mortgaged shares follows rife speculation on the cause of the sharp fall in the company's share price on Tuesday.

In a separate statement, the company said that Mr Wong was still in negotiations to sell his entire stake and that talks are scheduled to be concluded by next Friday. And should a deal be made, the company added, he would remain in office for 'a certain period of time' to ensure a smooth transition.

Mr Wong is Beauty China's largest single shareholder.

His cashing out would leave a void in the management given his pivotal role in the business, some market watchers have said.

In a note yesterday, UOB KayHian said: 'If the share sale is concluded at a premium to the current share price, it may prompt the market to reconsider the hidden value of the company.

'However, if the deal is concluded at a discount to the current share price, it will deepen the pessimistic view of the company's prospects, which in turn may trigger another sell-off.'

The brokerage is reviewing its 'buy' recommendation and target price for the stock. It expects weak consumption sentiment to affect the group after a disappointing fourth quarter.

Yesterday, Beauty China shares continued a second day's technical rebound. The stock put on 1.5 cents or 11.5 per cent to close at 14.5 cents.