Wednesday, January 27, 2010
Tuesday, January 26, 2010
Ernst & Young settles in Moulin case
The liquidator told creditors in private that one of Moulin's four biggest customers was really a Chinese restaurant in McCook, a town of 8,000 in Nebraska in the United States, people who attended the meetings said.
Sunday, January 24, 2010
China Fraud Ltd.
First Natural Holdings (1076.HK) unfortunately is not the only Chinese company used to scam billions from the public.
What does the HKex or SFC do about it?... NOTHING. The HKex in conflicting positions of both regulating and profiting off the market is all eager to accept IPOs while all too cavalier when policing the listed companies. The HKex faced with this conflict of interest clearly resolves it by forgoing any regulatory responsibility and just concentrates on profits.
The Singaporeans are now being stung by these scams. Chinese consumers can be thrown in jail for not paying credit card debts, but chinese company directors can openly steal billions and resort to gangster tactics with no consequences...
Fujian based companies seem to feature high in these shenanigans.
SCMP today:
Since late 2007, a spate of so-called S-chips - mainland companies listed on the Singapore exchange - have borrowed money then failed to repay the debts, with some becoming mired in fraud scandals.
Of the 11 S-chips that issued convertible bonds between 2005 and 2008, six have declared themselves unable to repay.
Of the 11 S-chips that issued convertible bonds between 2005 and 2008, six have declared themselves unable to repay.
In June 2008, blue-chip investment bank Morgan Stanley sold US$109 million worth of convertible bonds issued by waste recovery group Sino Environment Technologies, based in Fujian , to a group of lenders including US investment firm Stark Investments.
Sino-Environment's share price has since crashed from S$1.30 (HK$7.18) on the day it sold the convertible bonds to S$0.135 when the stock was suspended from trading in September.
During that period, Sino not only defaulted on its bonds - the Singapore-listed firm is also being investigated by the city state's Monetary Authority, a person involved in the case confirmed, after its auditors Pricewaterhouse Coopers said they could not verify the whereabouts of US$85 million of Sino-Environment's cash.
The Monetary Authority declined to comment.
China Printing & Dyeing, a textiles company, is one of the group of S-chips that could not repay bank loans.
It has fallen under what the Singaporeans call "judicial management", the city state's version of bankruptcy protection.
China Printing & Dyeing's shares were suspended from trading in October 2008 when its chief executive Tao Shoulong and deputy chief executive Yan Qi, a husband and wife team, disappeared. The duo fled after a subsidiary announced it was unable to honour 2 billion yuan (HK$2.27 billion) worth of debts. The pair were subsequently arrested in Guangdong, according to numerous reports in Singapore. The company was delisted from the Singapore exchange last week, leaving its shareholders with nothing.
Then there was Yangtze River Delta aluminium company Ferro-China, which buckled under the weight of almost US$1 billion of debts in 2008 before entering mainland bankruptcy proceedings.
The most recent S-chip bond default came from China Milk Products Group, based in Heilongjiang, that produces bull semen and cow embryos for cattle breeders,
The vast majority of the investors who bought US$150 million worth of convertible bonds China Milk sold through Deutsche Bank in December 2006 have exercised an option to get their money back, a person close to the agricultural company confirmed.
China Milk's net profit tumbled 73 per cent in the three months to last June compared to a year previously. The business was hit by last year's tainted milk scandal on the mainland, which cut demand among dairy farmers for new livestock.
On January 5, China Milk told its bond holders it would not be able to meet a repayment deadline. The company said it had the cash but was awaiting approval from the State Administration of Foreign Exchange, the mainland regulator that controls the flow of funds to and from abroad, to get it out of China. A person with knowledge of the firm said China Milk was confident of repaying its bond holders as soon as possible.
Then there is the case of Sino-Environment, which according to a person close to the company, could take many months to resolve.
The entire executive board, including chairman Sun Jiangrong, resigned on January 2 and a bitter spat has broken out between Sino-Environment's independent directors, led by new chairman Charlie In Nany Sing, who were appointed by investors to sort out the mess, and its mainland staff.
In December, a workers union at one of the firm's subsidiaries, Thumb Env-Tech Group (Fujian) announced its "few hundred" workers would resign en masse because the parent company's independent directors were "attacking" the executive directors and the company.
After PriceWaterhouse Coopers issued its report, the independent directors obtained an injunction from the Singapore Supreme Court to ban Sino-Environment's executive directors from selling the company's assets or signing contracts.
In May, a Sino-Environment subsidiary said it paid 920 million yen (HK$79.53 million) to a Japanese firm for chemicals, but the alleged recipient told the auditors it never received the cash.
When PwC visited Sino-Environment's bank, Xiamen International Bank, in Quanzhou , to try to investigate, the bank's branch manager forced the accountants off the premises and shuttered the building.
Another subsidiary, Fuda Desai Environmental Protection, allegedly invested 230 million yuan in four waste power projects, but PwC could not find any evidence that the payments were approved by the board, or even made.
Again, the auditors attempted to verify documents relating to the deals at the branch of Bank of Communications (SEHK: 3328) through which Sino-Environment had made the supposed payments.
They were met by a personal relationship banker who would not let them talk to anyone else or check the branch's IT systems to see if the payment documents were real.
The Sino-Environment executive directors, who have since resigned, accompanied PwC on both bank visits.
A third subsidiary, Fujian Weidong EPT Co, made two interest-free loans worth 50 million yuan to "two parties that did not appear related to the company," the PwC report continued. The accounting firm said it "did not come across any documentation evidencing that the company's board had been informed of or approved these loans".
PwC complained that Sino-Environment's executive directors had "hampered the performance" of its work. The accounting firm said Sun Jiangrong, who declined to comment for this article, would not provide any documents supporting the supposed deals and payments.
A person involved in the discussions with the Sino-Environment's bond holders said there was no certainty the US$109 million would be returned to them. Morgan Stanley declined to comment on the case.
The SIAS' Gerald said Singapore could do nothing more than pass its concerns on to mainland authorities. And in China, the Sino-Environment case has already been closed. The Fuzhou Public Security Bureau said on January 1 it had found no evidence of embezzlement at Sino-Environment, according to an announcement on Sino-Environment's website. A spokesman for the Singapore Stock Exchange would not comment on the issue of S-Chips defaulting on their loans.
Of course, Hong Kong investors have suffered similar problems. Since late 2007, 11 mainland companies listed here have also failed to repay some or all of their debts, according to data.
Sino-Environment's share price has since crashed from S$1.30 (HK$7.18) on the day it sold the convertible bonds to S$0.135 when the stock was suspended from trading in September.
During that period, Sino not only defaulted on its bonds - the Singapore-listed firm is also being investigated by the city state's Monetary Authority, a person involved in the case confirmed, after its auditors Pricewaterhouse Coopers said they could not verify the whereabouts of US$85 million of Sino-Environment's cash.
The Monetary Authority declined to comment.
China Printing & Dyeing, a textiles company, is one of the group of S-chips that could not repay bank loans.
It has fallen under what the Singaporeans call "judicial management", the city state's version of bankruptcy protection.
China Printing & Dyeing's shares were suspended from trading in October 2008 when its chief executive Tao Shoulong and deputy chief executive Yan Qi, a husband and wife team, disappeared. The duo fled after a subsidiary announced it was unable to honour 2 billion yuan (HK$2.27 billion) worth of debts. The pair were subsequently arrested in Guangdong, according to numerous reports in Singapore. The company was delisted from the Singapore exchange last week, leaving its shareholders with nothing.
Then there was Yangtze River Delta aluminium company Ferro-China, which buckled under the weight of almost US$1 billion of debts in 2008 before entering mainland bankruptcy proceedings.
The most recent S-chip bond default came from China Milk Products Group, based in Heilongjiang, that produces bull semen and cow embryos for cattle breeders,
The vast majority of the investors who bought US$150 million worth of convertible bonds China Milk sold through Deutsche Bank in December 2006 have exercised an option to get their money back, a person close to the agricultural company confirmed.
China Milk's net profit tumbled 73 per cent in the three months to last June compared to a year previously. The business was hit by last year's tainted milk scandal on the mainland, which cut demand among dairy farmers for new livestock.
On January 5, China Milk told its bond holders it would not be able to meet a repayment deadline. The company said it had the cash but was awaiting approval from the State Administration of Foreign Exchange, the mainland regulator that controls the flow of funds to and from abroad, to get it out of China. A person with knowledge of the firm said China Milk was confident of repaying its bond holders as soon as possible.
Then there is the case of Sino-Environment, which according to a person close to the company, could take many months to resolve.
The entire executive board, including chairman Sun Jiangrong, resigned on January 2 and a bitter spat has broken out between Sino-Environment's independent directors, led by new chairman Charlie In Nany Sing, who were appointed by investors to sort out the mess, and its mainland staff.
In December, a workers union at one of the firm's subsidiaries, Thumb Env-Tech Group (Fujian) announced its "few hundred" workers would resign en masse because the parent company's independent directors were "attacking" the executive directors and the company.
After PriceWaterhouse Coopers issued its report, the independent directors obtained an injunction from the Singapore Supreme Court to ban Sino-Environment's executive directors from selling the company's assets or signing contracts.
In May, a Sino-Environment subsidiary said it paid 920 million yen (HK$79.53 million) to a Japanese firm for chemicals, but the alleged recipient told the auditors it never received the cash.
When PwC visited Sino-Environment's bank, Xiamen International Bank, in Quanzhou , to try to investigate, the bank's branch manager forced the accountants off the premises and shuttered the building.
Another subsidiary, Fuda Desai Environmental Protection, allegedly invested 230 million yuan in four waste power projects, but PwC could not find any evidence that the payments were approved by the board, or even made.
Again, the auditors attempted to verify documents relating to the deals at the branch of Bank of Communications (SEHK: 3328) through which Sino-Environment had made the supposed payments.
They were met by a personal relationship banker who would not let them talk to anyone else or check the branch's IT systems to see if the payment documents were real.
The Sino-Environment executive directors, who have since resigned, accompanied PwC on both bank visits.
A third subsidiary, Fujian Weidong EPT Co, made two interest-free loans worth 50 million yuan to "two parties that did not appear related to the company," the PwC report continued. The accounting firm said it "did not come across any documentation evidencing that the company's board had been informed of or approved these loans".
PwC complained that Sino-Environment's executive directors had "hampered the performance" of its work. The accounting firm said Sun Jiangrong, who declined to comment for this article, would not provide any documents supporting the supposed deals and payments.
A person involved in the discussions with the Sino-Environment's bond holders said there was no certainty the US$109 million would be returned to them. Morgan Stanley declined to comment on the case.
The SIAS' Gerald said Singapore could do nothing more than pass its concerns on to mainland authorities. And in China, the Sino-Environment case has already been closed. The Fuzhou Public Security Bureau said on January 1 it had found no evidence of embezzlement at Sino-Environment, according to an announcement on Sino-Environment's website. A spokesman for the Singapore Stock Exchange would not comment on the issue of S-Chips defaulting on their loans.
Of course, Hong Kong investors have suffered similar problems. Since late 2007, 11 mainland companies listed here have also failed to repay some or all of their debts, according to data.
A corporate debt salesman at an international bank, who asked not to be named, does not blame these mainland insolvencies entirely on the companies themselves. "There was so much demand in the boom years from hedge funds and banks for debt linked to Chinese companies," he said. Maybe everyone was a bit too dazzled by geography."
Beware.
Friday, January 22, 2010
First Natural 1076 - raped naturally: Chinese style
As show by the latest filing, we have a Fujian/China company listed in HK asset raped by management. The sad state of affairs started when the chairman (Yeung Chung Lung), son (Yang Le) and son-in-law(Ni Chao Peng) resigned from the board. The chairman and his son then subsequently disappeared.
Now First Natural, a public HK company cannot assert any ownership rights over it's subsidiaries in China, resulting in a loss of RMB$1.5B and all assets. The provisional liquidators in some cases cannot even get a hearing in a Chinese court:
(iii) Ningbo Dingwei
The Company has attempted to file a statement of claim with the Ningbo Intermediate People’s
Court of Zhejian Province ( ) but the filing was denied by the court.
The company had a over RMB$800m in cash and this has disappeared. Cash as seen on the balance sheets of Chinese companies is NO margin of safety for investors.
The family of thieving bastards:
Monday, January 18, 2010
Road King (1098.HK) pays HK$1B for.... what??!
Another case demonstrating the risk of doing in business in China with it's rudimentary rule of law. Road King enters into an agreement with Sunco to buy shares and effective control. Roadking pays $600m after which Sunco refuses to cede control. Roadking on the advice of "legal counsel" pays another $400m to cover further Sunco expenses on the hope they maybe able to recover that from Sunco at a later date.
Tragic and yet afar comedic. Has the makings of a classic Nigerian scam on a bigger scale..
One major cause of this mess is Road King's move away from it's core competency (toll roads) into property.
rights and to assume effective control over the Tianjin Companies. However, the legal proceedings against the former
management of the Tianjin Companies were temporarily suspended in 2008 on the basis that unspecified facts which
related to those proceedings may overlap with unspecified matters under investigation by Tianjin authorities.
In January 2009, the Company received a notice advising that an investigation on a criminal accusation by Tianjin
authorities was officially dismissed. In addition to the legal proceedings as mentioned above, with the assistance
provided by the Tianjin municipal government, the Group is now gradually resolving the legacy problems of the
Tianjin Companies in Tianjin with a view to eventually obtain effective control over the Tianjin Companies. However,
at the date of this report, the former management of the Tianjin Companies has not yet handed over the official
seals and books and records to the Group and in the opinion of the Directors, the Group has not obtained control
over the Tianjin Companies. The Group will continue its best endeavours to obtain effective control over the Tianjin
Companies.
As the Group does not have control, and is not in a position to exercise significant influence, over the operating and
financing policies of the Tianjin Companies, the Tianjin Companies are not currently considered to be subsidiaries
or associates of the Company and therefore they are accounted for as available-for-sale financial assets. Accordingly,
the financial statements of the Tianjin Companies have not been consolidated into the Group’s condensed
consolidated financial statements. The investments in the Tianjin Companies, amounting to HK$638,526,000 as at
30 June 2009 (31 December 2008: HK$632,787,000), have been recorded at cost less impairment because the
investments are unquoted equity shares whose range of reasonable fair value estimates is so significant that the
Directors are of the opinion that the fair values cannot be measured reliably.
During the period ended 30 June 2009, the Group has made various payments on behalf of the Tianjin Companies,
including the settlement of their bank loans of RMB300 million, accrued interest on the bank loans, construction
costs and other expenses, totaling HK$446,086,000. These payments are considered as loans and advances to
the Tianjin Companies and based on the advice from the PRC legal counsel, the Group has the right to recover
these amounts due from the Tianjin Companies.
Based on the impairment review on the investments in, and loans and advances to, the Tianjin Companies, in the
opinion of the Directors, no impairment on the carrying amounts in relation to the Tianjin Companies is considered
necessary. However, as the timing and the eventual outcome of the court proceedings or the satisfactory resolutions
of the legacy problems of the Tianjin Companies cannot presently be determined with certainty, there exists
uncertainties that the Group may be unable to obtain effective control over the Tianjin Companies or otherwise
realise the underlying properties of the Tianjin Companies, thereby impacting the recoverability of the Group’s
available-for-sale financial assets amounting to HK$1,084,612,000 as at 30 June 2009.
Wednesday, January 13, 2010
PME Group (0379) convertible bonds, 91% discount!!
Company planning to raise $246M in cash from convertible bonds.
- Conversion shares of 487% of existing issued capital!!
- Conversion price of HK$0.03. Current stock price: $0.337. DISCOUNT OF 91%!!!!
- Current market capitalization : $623m (96% of book)
So shareholders (74.5% in public hands) are going to get savagely raped by the management who think the shares are worth less than 10% of book value.
Who gets the convertible bonds? In the filing:
“Placee(s)” any individual(s), institutional(s) or other professional investor(s)
procured by the Placing Agent, pursuant to the Placing Agent’s
obligations under the Placing Agreement, to subscribe for any part
of the Convertible Bonds
“Placing” the placing of the Convertible Bonds, on a best effort basis, by the
Placing Agent (pursuant to the Placing Agreement) under specific
mandate.
“Placing Agreement” the agreement dated 7 January 2010 and entered into between the
Company and the Placing Agent in relation to the Placing
No prizes for guessing what the shares will do tomorrow.
The SFC and HKex sleeping as usual.
Beware.
Monday, January 11, 2010
Andy Xie on the China bubble
Andy has a proven track record unlike other economists.
Article worth reading in it's entirety.
"Other Asian economies such as Japan, South Korea and Taiwan failed to shed export dependency and develop domestic growth. Periodic spikes in consumption are usually due to asset inflation. Once a country loses export market share on rising costs, it stagnates because property bubbles during high growth periods deter consumption while overwhelming the middle class with housing expenses. China may be following the same path: Despite a decade of talking about promoting consumption, that share of GDP has been declining year in, year out."
"The high export growth era is over for three reasons. China's market share in global trade is twice as big as its GDP share. The odds are low that China could continue to expand its market share. Second, the tide won't rise as fast as before. The Greenspan era saw a credit bubble supercharge western consumption, but the bubble has burst. Odds are that future trade growth will be half or less as in the past. Finally, a western employment crisis will lead to protectionism targeting China. Other developing countries may gain market share at China's expense."
Sunday, January 10, 2010
HK government puppets, business masters
One person multiple votes.
SCMP:
Among the 12 seats, four small functional constituencies had fewer than 200 registered voters, with the financial sector having just 140 - the smallest number of voters in all the functional constituencies. However, the actual number of voters may be even smaller than the official figures, as some large companies can have more than one vote in one sector through their subsidiaries.
In the transport constituency, which had only 178 registered electors in 2008, property tycoon Cheng Yu-tung's New World Development had five votes, including Citybus and New World First Ferry Services.
Tycoon Li Ka-shing's Hutchison Whampoa (SEHK: 0013) controlled at least four votes in this sector with its subsidiaries including Hongkong United Dockyards and Hongkong Salvage and Towage.
With subsidiaries taking in the property, hotel, retail, transport and information technology industries, Li's Cheung Kong (SEHK: 0001) Group and Hutchison Whampoa had at least 20 multiple corporate voters across eight sectors in the 2008 election, according to a search of the two companies' subsidiaries listed in their annual reports. The Kwok family's Sun Hung Kai Properties (SEHK: 0016) controlled at least 10 votes, with a number of voters in the tourism sector, including The Royal Garden and Royal Park Hotel.
New World Development had 11 multiple voters, while tycoon Lee Shau-kee's Henderson Land Development (SEHK: 0012) Company controlled at least seven votes. Wharf, chaired by former chief executive candidate Peter Woo Kwong-ching, had at least six votes.
In the transport constituency, which had only 178 registered electors in 2008, property tycoon Cheng Yu-tung's New World Development had five votes, including Citybus and New World First Ferry Services.
Tycoon Li Ka-shing's Hutchison Whampoa (SEHK: 0013) controlled at least four votes in this sector with its subsidiaries including Hongkong United Dockyards and Hongkong Salvage and Towage.
With subsidiaries taking in the property, hotel, retail, transport and information technology industries, Li's Cheung Kong (SEHK: 0001) Group and Hutchison Whampoa had at least 20 multiple corporate voters across eight sectors in the 2008 election, according to a search of the two companies' subsidiaries listed in their annual reports. The Kwok family's Sun Hung Kai Properties (SEHK: 0016) controlled at least 10 votes, with a number of voters in the tourism sector, including The Royal Garden and Royal Park Hotel.
New World Development had 11 multiple voters, while tycoon Lee Shau-kee's Henderson Land Development (SEHK: 0012) Company controlled at least seven votes. Wharf, chaired by former chief executive candidate Peter Woo Kwong-ching, had at least six votes.
And as expected from a non representative government, they pull from the bin of pathetic ridiculous excuses...
In its consultation paper on constitutional reform, the government noted public views that the functional constituencies electorate should be broadened, but proposed no alternatives.
The paper said: "This is because the process would be too complicated and involve the interests of many different sectors and individuals. It would not be easy for the community to reach consensus on this matter."
The paper said: "This is because the process would be too complicated and involve the interests of many different sectors and individuals. It would not be easy for the community to reach consensus on this matter."
Friday, January 1, 2010
Oops, Chaoda (0682) does it again
Pays $450M in stock valued at $7.65 for 70% of a company (Keen Spirit) that has:
- NO REVENUES just losses
- $20M of liabilities
Not clear from the filing but the Keen Spirit group has around $25M of annual loss up to Nov 2009.
It's a considerable leap of faith for anyone to believe this is an intelligent investment made by Chaoda.
What exactly are they buying??...
So not only are they paying $450M for a loss making company with no independently valued asset value, they are moving away from their core competency and into biotech.
Subscribe to:
Posts (Atom)