HK-listed Fosun bonds plunge, shares suspended as chairman goes missing

Billionaire Guo Guangchang.
Billionaire Guo Guangchang. PHOTO: REUTERS

BEIJING (Bloomberg) - Fosun International bonds plunged by a record and the company suspended its shares in Hong Kong after Caixin magazine reported that billionaire Chairman Guo Guangchang had gone missing.

Closely held Fosun Group, which controls Fosun International,  "lost contact" with Guo, 48, the magazine said, citing people it didn't identify.

Fosun later said its chairman was cooperating with judicial authorities over a reported corruption investigation, according to AFP.

“The company understands that Mr Guo is currently assisting in certain investigations carried out by Mainland judiciary authorities,” it said.

The shares declined for a sixth consecutive day on Thursday in Hong Kong, losing 1 per cent to close at HK$13.34, and tumbled more than 11 per cent to US$1.55 in over-the-counter trading in New York.

Fosun International dollar bonds fell by a record, with the US$400 million of 6.875 per cent bonds due in 2020 slumping 16.1 cents to 88.3 cents, before trading at 92.11 cents on the dollar as of 12:15 p.m. in Hong Kong.

"The news that the chairman went missing will take a toll on the bond prices and until the company can clarify the situations, we'd expect further weakness in the near term," Nuj Chiaranussati, a Singapore-based debt analyst at Gimme Credit.

Guo, who calls himself a student of Warren Buffett, built Fosun Group into an empire spanning everything from insurance to holiday resorts through dozens of deals over the past three years, most of them made through Fosun International.

His companies own Club Mediterranee and Greek jewelry brand Folli Follie, as well as a stake in Cirque du Soleil.

Fosun International suspended trading pending "release of an announcement containing inside information," while business operations "remain normal," spokesperson Chen Bo said on Friday in a text message. He did not immediately respond seeking comment on the Sohu report.

News that Guo is unreachable prompted many related companies to halt trading.

Shanghai Fosun Pharmaceutical, Nanjing Iron & Steel, Shanghai Yuyuan Tourist Mart and Hainan Mining suspended trading in Shanghai on "relevant issue" verification, according to Shanghai Stock Exchange.

The Hang Seng China Enterprises Index of Chinese stocks traded in Hong Kong slumped 1.2 per cent to its lowest level in six weeks.

"The missing chairman is going to have a big impact on investing in China and the performance of the company," said Cyrus Ng, an analyst in Hong Kong at China Galaxy Securities.

Guo, who sold bread door-to-door to help support himself through college, has built Fosun by borrowing from the investing approach used by Buffett's Berkshire Hathaway.

In the process, he has become China's 17th richest man with a net worth of US$5.6 billion, according to the Bloomberg Billionaires Index.

Guo co-founded Fosun with four friends and about US$6,000 in capital in the 1990s. This year, Fosun International has announced 16 deals worth a combined 29 billion yuan (US$4.5 billion), according to data compiled by Bloomberg.

Some of Fosun's biggest acquisitions include One Chase Manhattan Plaza in New York. In July, it said it bought the former Milan headquarters of Italy's UniCredit SpA.

In August, China's official Xinhua News Agency said Guo granted favors to an executive of a state-owned company 12 years ago in exchange for unspecified benefits, according to a report in the Wall Street Journal. Guo wasn't accused of wrongdoing, according to that report.