Attempts by Xiangming Huo to extract himself from his unprofitable Pegasus Resort development near Christchurch saw High Court involvement in his ongoing dispute with potential saviour Hong Kong-based Rotorway Ltd.
Rotorway is part of Yellow River Global Capital. It agreed in late 2023 to inject approximately $90 million dollars into Pegasus Resort. About sixty million dollars is intended to fund a Pegasus upgrade; the balance to buy out Mr Huo’s majority shareholding in Pegasus’ holding company: Sports & Education Corporation Ltd.
If all goes to plan, Rotorway will have a ninety per cent shareholding in Pegasus Resort, giving it majority control.
Evidence before the High Court shows not all is going to plan.
This refinancing is subject to both due diligence by Rotorway and government Overseas Investment Act approval.
Mr Huo says that Rotorway has failed to progress its due diligence and that it will never get overseas investment approval.
In early 2024, Mr Huo put Pegasus up for sale; a breach of their conditional refinancing agreement, Rotorway claims.
It asked the High Court for an injunction to have Mr Huo remove Pegasus’ market listing.
While ruling there is clearly a live legal issue as to whether Mr Huo is entitled to list Pegasus for sale at a time when Rotorway’s refinancing remains conditional, Justice Campbell refused Rotorway’s request for an injunction.
Mr Huo and his holding company are able to pay damages if later found to be in breach of their agreement, Justice Campbell said. Mr Huo claims Rotorway agreed the Resort could be listed.
In contrast, Rotorway has not provided sufficient evidence of its financial strength should it be required to pay costs on any unsuccessful subsequent court hearing, Justice Campbell said.
Rotorway told the court it had assets valued at USD 15 million; the value of a trademark in respect of Rotorway helicopters.
Justice Campbell pointed out this trademark is not held by Rotorway based in Hong Kong, it is held by one of its US subsidiaries. And he questioned the reputed USD 15 million valuation. Evidence was given that this valuation is based on prospective helicopter sales in coming years jumping from a recent three to four sales per year to a projected 110 helicopters to be sold annually.
Rotorway Ltd v. Sports & Education Corp Ltd – High Court (10.10.24)
25.010