Shaw scraps sale of old studio grounds!

Shaw Brothers, the holding company of media tycoon Sir Run Run Shaw, has scrapped a HK$25.2 million deal to sell 123,031 square feet of Sai Kung farm land which was formerly used as studio lots to film some of the most well-known Asian blockbusters to Shaw's wife, Mona Fong.

Fong, the deputy chairwoman and managing director of Shaw Brothers, will be refunded her HK$2.5 million deposit within seven days without interest or penalty, the company said in a stock exchange announcement.

An independent financial adviser gave its recommendation for the disposal, but the Securities & Futures Commission as well as other shareholders who stated sentimental and historic art related reasons did not accept it, CFO Jerry Rajakulendran said.

Since the company is subject to a takeover offer from Guangdong property mogul Yeung Kwok Keung, the Takeovers Code required SB to receive consent for the land disposal from the executive director of the SFC's corporate finance division. "We didn't get the consent from the SFC," Rajakulendran said. "They think that we shouldn't do it at this time. The SFC wants the company to wait until there is some conclusion on the takeover offer before the company thinks of selling any assets, particularly to connected parties.”

An investment bank analyst said it is "quite curious" that the farm land disposal, announced on August 13, had to be called off only 20 days later. "I don't understand why the SFC sunk the deal so quickly," the analyst said. "There are too many puzzles. We need some explanation from the company. The company didn't explain these mysteries."

Shares of Shaw Brothers dropped 5.5 percent or 92 HK cents on Monday evening to close at HK$15.80. The stock has lost more than 24 percent of its value since news of Yeung's approach emerged at the end of May 2008.