Tag Archives: HKEX

Wanda Wins Thanks to No Shows

 

 

Wanda Final Vote

Dalian Wanda,  3699 HK,  won its fight to de-list, thanks to low voter turnout.  Wanda showed that it got more than the 75% votes needed to de-list its H-shares. The against votes were also less than the needed 10% to defeat. However, the “For” votes only represented 58% of the eligible Independent votes, which would have been well below the 75% needed assuming those absent voted either against or abstained.  The missing 217,357,004 of eligible voters represents a whopping 34% of the shares.  Makes you wonder why they didn’t vote.  No mail or internet?  No flights to Beijing? (Also makes me feel a little better about what I wrote here.)

The shares, which closed at 51.2 hkd prior to suspension on 8/16/2016, will resume trading on 8/16/16.  The offer price was 52.8, hkd.  Dalian Wanda will be filing for the listing withdrawal.  The H shares represented just 14.4% of the total shares of the company or about $4.4 Billion US of the $30.8 Billion US market cap based on the offer per share.  Of that $30.8 billion US, about $17 Billion US is currently owned by Jianlin Wang and Wanda directors.

Next Up: the A share listing.  The extension of the A share listing was approved by 99% of the total shares and will be pursued.

Current Ownership

Here are the owners as presented at the date of the meeting.

wanda a and h owners

i Ms. LIN Ning is the spouse of Mr. WANG Jianlin
.ii Mr. DING Benxi, Mr. QI Jie, Mr. ZHANG Lin and Mr. YIN Hai are directors of Dalian Wanda Group.Mr. LIU Zhaohui is a director of the Company and the vice president of Dalian Wanda Group.Mr. QU Dejun is a director of the Company and the president of a wholly-owned subsidiary of Dalian Wanda Group.
iii Dalian Wanda Group is controlled by Mr. WANG Jianlin through Dalian Hexing. which in turn controls approximately 99.76% of the voting rights in Dalian Wanda Group.The remaining 0.24% voting rights in Dalian Wanda Group is controlled by Mr. WANG Jianlin directly.
iv This includes the shareholding of one Director.In respect of the Domestic Shares, Mr. WANG Zhibin, an executive Director, held 1,600,000.Domestic Shares.In respect of the H Shares, Mr. QI Daqing, an independent non-executive Director, held 20,000 H Shares.
v CICC is the financial advisor to the Joint Offerors and relevant members of the CICC group
vi The limited partners of WD Knight VIII are PA Investment Funds SPC II and PA Investment Funds SPC III,and all the management shares.in both companies are owned by Ping An of China Securities (Hong Kong) Company Limited, a subsidiary of Ping An Insurance (Group) Company of China, Ltd.Certain group members of Ping An Insurance (Group) Company of China, Ltd, hold in aggregate 505,561 H Shares.All such H Shares are not proprietary interests of PA Investment Funds SPC II and PA Investment Funds SPC III,
vii One of the limited partners of WD Knight IX is Guotai Junan Finance (Hong Kong) Limited.Guotai Junan Securities (Hong Kong) Limited is a fellow subsidiary of Guotai Junan Finance (Hong Kong) Ltd.
viii All these Domestic Shareholders who hold H Shares have abstained from voting on the resolution in relation to Delisting in the EGM and in the H Share Class Meeting.
ix The percentage numbers of total Shares in issue in the above table add up to only 99.99% due to rounding
x This means H Shares held by the Independent H Shareholders, being H Shareholders other than theOfferers and persons acting in concert with any of them.Such Joint Offerors and persons acting in concert with any of them do not include relevant members of CICC.group, Ping An Insurance (Group) Company of China, Ltd., Guotai Junan Securities (Hong Kong) Limited whichholding of interests. H Shares are non-discretionary and not their proprietary owned.

 

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Penny Dreadful Tech Pro’s Last Gasp

 

Tech Pro Stock

Tech Pro. 3823 HK, drops another 6.7%, to .28 hkd (that’s 4 cents, US).  Here’s why there is room to fall further.

Just 10 days after its stock collapsed, Techpro 3823  hk directors reached for a self-made life preserver.  Unfortunately, the life preserver won’t inflate.

Techpro closed down 86% on July 28th following a devastating report by Glaucus Research. The report by the short seller was long on details which showed multiple frauds including massive under-reporting of “earnings”, and intentional misrepresentation of acquisition costs.  Glaucus gave the stock a 0 value. Techpro denied the allegations, but the stock continued to drop, falling to .14 hkD on 6/29 but rising back up to .30 by the end of trading 8/5/16. On that day trading was at an inexplicable 1.3 billion shares versus the average 223 million.

In addition to the stock plunge, the report triggered an avalanche of events, including a violation of listing rules when the plunge forced margin sales by the directors during the 30 day pre-earnings release black-out period. This dropped their combined ownership interests by over 50%.  Their ownership will drop further if proposed new share issues happen.

techpro 1

 

Source: HK filings

Given the drop in price, the trigger was understandable.  Had they been able to hold their shares, they would have lost a combined $480 million US. The sale was subsequently reviewed by the directors and declared to be okay, given the exceptional circumstances. Rules were meant to be broken.

techpro 2

Source: HK Filings

In addition to the stock sale violation, the circular with the details for the remaining 50% purchase of the property management firm, Shanghai Fuchao Mgt, were delayed.  The Glaucus report stated that the original 50% purchase was overstated in Hong Kong filings. From the same SAIC filings, the property management company’s earnings were also over-stated based on local area rents and Fuchao’s position as a sub-leasing agent, not owner.  This was critical in terms of assets and income since it was the only business that consistently reported a profit.

More Fun to Come

After the bell on Friday, August 5, the company declared an undefined net loss for the 1st half of 2016.  The loss was blamed on lower LED sales and higher operating expenses.

 

Last Gasp Efforts

About 2 hours before the loss announcement, the company presented two new share issue schemes: one under General Mandate, GM and the other under Special Mandate, SM.  If successful, it would issue 2.6 million new shares , at .25 per share for net proceeds of 616 Million rmb, about 79.4 Million $US.  Both would be to a minimum of 6 investors and subject to a 6 month lock-up.  Per the filing, the GM shares wouldn’t require shareholder approval while the SM would.  The price is a 16.7% discount to August 5 closing and a 7.3% premium to the prior 5 day average. The two are not inter conditional. As shown below, the full issuance would decrease public share ownership by 28.5%.  Proceeds for both were for working capital, soccer team funding and future business development.

techpro 4

 

Source: HK Filing.  Note 1: Chairman & Director, Note 2: Directors

Potential problems were noted long before the Glaucus report in March when the Wall Street Journal questioned unusual trading activity in a small-cap, minimally profitable company with a potential for day to day returns of a whopping 791%. Even the French soccer team it bought, Sochaux-Montbéliard SA (“FCSM”), was skeptical as to how the Chairman of Techpro, Li Wing Sang, (aka Amos Li Wing Sang), could hang out in France every week in France while running a company.  They were also worried about the company’s ability to finance their needs.

It is doubtful the share issuance will be approved.  After the recent events, the odds are in favor of Glaucus. Looks like light’s out for Techpro.

(Disclosure: I have no interests in Techpro.)