A company controlled by the husband of Hong Kong Secretary for Justice Teresa Cheng Yeuk-wah, who was sanctioned by the US government, has sold part of its business in New York, citing US-China tensions.
Engineering firm Analogue Holdings, which is 63.48 per cent owned by Cheng’s husband, Otto Poon Lok-to, cut its stake in a New York-based joint venture called Transel Elevator & Electric Inc. (TEI) from 51 to 49 per cent, selling the difference to its partner on Tuesday for US$1.4 million (HK$10.9 million).
The sale represents a setback to Analogue’s ambition of expanding into the US market just five months after it bought the majority stake in TEI. After the sale, Analogue will remain the largest shareholder of TEI, which provides lift and escalator services in New York, but TEI will no longer be considered a subsidiary.
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On Monday, the company said it “preliminarily does not believe the sanctions … will apply to the Group”, and that operations would “remain normal”.
The next day, however, Poon said in a statement that the company had reassessed the regulatory, operating, and business environment in the United States, and followed legal advice that it was in its best interest to have American partner Mark Gregorio increase his stake.
Poon attributed the sale to “changing Sino-US tension”.
Cheng was among 11 Hong Kong and mainland officials sanctioned by President Donald Trump’s administration for having a hand in the implementation of the national security law in June, and for their “actions or policies that threaten the peace, security, stability or autonomy of Hong Kong”.
The couple are named as key shareholders in Analogue, with 888.65 million shares, but the company maintained on Monday that Cheng did not have any rights, such as receiving dividends, voting or dealing in the shares.
Analogue, which Poon founded in 1977 and floated on the Hong Kong stock exchange in 2019, is his core asset, and the stake he and Cheng have in the company is worth HK$850 million (US$110 million) based on the current share price – which held steady at 96 HK cents on Tuesday.
While the full size of Poon’s personal fortune is not known, he donated HK$100 million to his alma mater, Hong Kong Polytechnic University, in 2018, on top of a total of HK$3.5 million cash gifts over the previous 18 years.
His fortune shrank by HK$572.4 million in 2013 in his divorce from Kay Kan Lai-kwan, who was awarded half of their matrimonial assets of more than HK$1.1 billion.
In December of last year, Analogue became a subject of an antitrust investigation that saw the Competition Commission raid the offices of its wholly-owned subsidiary, ATAL Building Services Engineering. The commission at the time said it had reasonable cause to suspect ATAL breached the first conduct rule of the Competition Ordinance by working with other competitors during a tender for work with a Hong Kong developer.
The first conduct rule deals with price fixing, bid rigging and joint tendering, among other things.
The commission does not comment on its investigations, and the current status of the inquiry is unknown.
Efforts to reach Poon for comment on Tuesday were unsuccessful, and calls to his phone went unanswered.
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