Tech Pro, 3823 H, the penny dreadful which dropped after a short-seller report, is hoping for a savior from Blue Sky Power, 6828 hk. The company just appointed 47 year old Lee Tsz Hang, aka Sze Chun Lee, the previous CEO and director of Blue Sky Power, a natural gas refueller and trader.
Purchase and Placement Fail
The day before this announcement, on 8/31/2016, the company stated that a proposed placement shares – both by a general and special mandate, had lapsed. These shares were to be issued to allow the company to buy the other 50% of Fuchao property group, which it had agreed to purchase for 387.5 Mill rmb on 6/3/2016. The two placements were projected to raise net hk$616 Million (about 530 Million rmb.) on a share price of hk$.25. Without these placements, it’s doubtful the company could make the purchase since it has only hk$81.7 in cash and has been losing money annually from its declining LED business and soccer team funding of Sochaux-Montbéliard SA, (FCSM).With a plummeting stock price and the scrutiny of short-sellers, it’s prospects for debt financing are slim. After the announcement of the hiring of Mr. Sze Chun Lee, the company reported the Fuchao purchase was also over since it was reliant upon the placement.
Blue Sky Power Exec to the Rescue
In an interesting turn, the company appointed Mr. Lee Tsz Hang. Blue Sky Power Holdings is currently a natural gas refueller and trader. However, prior to this, it was China Print Power, a small-cap printer which had declined into a money-losing company. Rather than liquidate, Mr. Lee used the assets of the company to transform it into a natural gas refueller and trader, issuing multiple shares and bonds and eventually selling a majority interest to Beijing Enterprises. Neither companies have any relation to LED or property management. However, if Mr. Lee Tsz Hang was able to transform an old fashioned, money losing print business into a natural gas company, riding the wave of China’s pollution edicts, the Tech Pro must be betting he can perform the same magic to transform it. The company does still have cash and minimal debt. As extra incentive, he owns 64,370,000 shares in Tech Pro, about 1% and will get HK$ 35,000/month.To be continued.
Tech Pro Financial Statement from HK filing.
|Pledge Bank Dep||498||487|
|Totl Curr Assets||391,605||445,700|
|other non C||5,635||5,179|
|Total Non C Assets||727,924||765,069|
|Finance Lease Oblig||495||494|
|Inc Tax Payable||21,153||21,153|
|Total C Liab||112,480||124,043|
|Non C Liab|
|Def Benefit Oblig||2,374||2,051|
|Def Inc Tax||66,503||78,222|
|Total Non C Liab||69,385||81,014|
|Assets – Liab||937,664||1,005,712|