[Originally published in CBK's "Week in Review" email newsletter, Jan. 12, 2012.]
MARKET MOVES
China TMK Battery to Cease Reporting; Weighing Options
Shenzhen-based China TMK Battery Systems (OTC: DFEL) announced it had filed a Certification and Notice of Suspension of Duty to File Report with the SEC in order to reduce substantial legal and accounting expenses. The company was eligible to deregister its common shares because it had fewer than 300 holders of record of its common shares at the beginning of its fiscal year. The board is in the process of evaluating strategic alternatives for the company including a sale, merger, privatization, or other business combination. According to the company’s press release, the board has not set a timetable for completion of this evaluation process and can make no assurances that this review will result in any action. The company also announced it has delivered payment to all eligible investors for the make good provision as stipulated in its registration rights agreement dated February 10, 2010. TMK has wired the penalty funds to Escrow and Agent Service Co., LLC. Funds will be distributed by check to each investor’s address of record.
WSP Holdings Considering Going Private
The board of Wuxi-based WSP Holdings Ltd. (NYSE: WH) announced that its board of directors has formed a special committee of independent directors to consider strategic alternatives which would enhance shareholder value after the company received a proposal from an investment company run by its Chairman and CEO, Longhua Piao, to take the company private. The offering price is U.S. $0.60. For the past 3 months the stock has been trading at an approximate average of $0.45, on the high end around $0.55 and the low end around $0.37. Piao owns $50.9 percent of WSP.
Ossen Receives a Letter of Non-Compliance from Nasdaq
Shanghai-based Ossen Innovation Co., Ltd. (Nasdaq: OSN) has received a letter of non-compliance from Nasdaq in regard to the minimum bid price rule, which requires the company’s stock to close at a minimum of $1.00 for 30 consecutive business days. In order to regain compliance, the company has until June 26, 2012 for the closing bid price of its American Depositary Shares (ADS’s) to meet or exceed $1 for a minimum of ten consecutive business days. If the company has not regained compliance by the expiration of the initial 180 calendar days, NASDAQ will then provide written notification to the company that its ADS’s are subject to delisting.
QKL Stores Receive Letter of Non-compliance from Nasdaq
Daqing-based QKL Stores Inc. (Nasdaq: QKLS) has received a letter of non-compliance from Nasdaq in regard to the minimum bid price rule, which requires a company’s closing day bid to be at least $1.00 for 30 consecutive business days. The letter has no immediate effect on the listing or trading of the stock, which trades on the Nasdaq Capital Market.
Cleantech Moves from Nasdaq GM to Nasdaq CM
The common stock of Wuxi-based Cleantech Solutions International Inc. (Nasdaq: CLNT) began trading on The Nasdaq Capital Market on Dec. 29, 2011, moving there from The Nasdaq Global Market. It continues to trade under the same ticker “CLNT”. The transfer to The Nasdaq Capital Market was made at the request of the company since the company did not meet the minimum market value of publicly traded shares requirement of $5,000,000 on The Nasdaq Global Market. The Company meets the minimum market value of publicly traded shares for The Nasdaq Capital Market.
Jingwei International Receives Going Private Proposal from Chairman/CEO
Jingwei Interational Ltd. (Nasdaq: JNGW) announced on Jan. 6, 2012, it had received a proposal from George (Jianguo) Du, Chairman and CEO, for a “going private” transaction. Du owns 41.1 percent of Jingwei’s common shares. The letter proposes the directors consider a reverse stock split transaction that would include a reverse split at a 1-for-50,000 share ratio followed by a cancellation of all fractional shares below one whole share at a per share price of $1.56. Du also offered to finance the proposed transaction. No decisions have been made.
Qihoo Launches Share Repurchase Program
The board of Beijing-based Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) has approved a share repurchase program of up to U.S. $50 million of the company’s American Depositary Shares. The share repurchases are currently expected to be made through open market purchases or privately negotiated transactions as market conditions warrant, at prices the company deems appropriate, and in accordance with SEC requirements. The share repurchase will be funded with the company’s existing cash reserves and ongoing cash flow. The company had U.S. $319 million cash and cash equivalent on its balance sheet as of Sept. 30, 2011. CEO, Mr. Hongyi Zhou, also serves as Chairman.
Independent Audit of ChinaCast’s Cash Balances Published
Beijing-based ChinaCast Education Corp. (Nasdaq GS: CAST) announced the findings of FTI Consulting’s review of its cash balances as of June 30, 2011. FTI found that as the company had cash, cash equivalents and term deposits totaling U.S. $132.1 million (RMB 845,674,247) held with 29 PRC financial institutions. This total represents 98.5 percent of the total cash, cash equivalents and term deposit balances reported in the company’s form 10-Q for the second quarter ended June 30, 2011. Per the company press release, the remaining 1.5 percent discrepancy is attributable to the termination of the company’s University of Petroleum e-learning joint venture. ChinaCast hired FTI to do the audit to ease the minds of investors after a smattering of bad press and allegations of fiscal malfeasance, some of which was published by short sellers which held CAST stock.
COMPANY NEWS
China Automotive Forms J.V. with Truck Manufacturer
The board of China-based China Automotive Systems Inc. (Nasdaq: CAAS) approved the formation of a joint venture with heavy-truck manufacturer, SAIC-IVECO Hongyan Co., to create a new manufacturing facility with a capacity to produce 200,000 power steering units for commercial vehicles in China. The new joint venture, named Chongqing Henglong Hongyan Power Steering Systems Co. Ltd., has registered capital of RMB 60 million. It will be 70 percent owned by CAAS. SAIC-IVECO will own the remaining 30 percent. The plant will be located in Chongqing City, where SAIC-IVECO is based. China Automotive Systems manufactures power steering components and systems. The chairman of CAAS is Mr. Hanlin Chen.
Ambow Education Divests
Beijing-based Ambow Eduation Holding Ltd. (NYSE: AMBO) announced on Jan. 5, 2012, it would divest a number of assets to be completed for the end of fiscal year 2011 to sharpen the focus on its core service, tutoring and career enhancement. So far, the company has completed the following:
- It sold its Beijing Century College and its 100 percent owned Beijing Siwa Century Facility Management Co. back to its original owner;
- It returned its 21st Century K-12 school assets to its original owner for a 15-year operating right of the school. It also agrees to jointly fund future capital expenditures through separately negotiable agreements; and
- It sold one career enhancement and three tutoring subdivisions as a package.
As a result of the above transactions, the revenue of the sold business units excluding 21st Century K-12 School for which the company has retained a 15-year operating right are estimated to be around U.S. $8.0 million[1] for the fourth quarter of 2011 and U.S. $25.0 million for fiscal year 2011. Ambow Education is a provider of educational and career enhancement services in China, offering high-quality individualized services and products. Ambow has two business divisions: “Better Schools,” which includes tutoring centers and K-12 schools; and “Better Jobs,” which includes career enhancement centers and colleges.
PROFESSIONAL SERVICES FIRM NEWS
Orient Paper Switches Auditors in the BDO Network
Baoding-based Orient Paper Inc. (Amex: ONP) has hired BDO China Shu Lun Pan CPAs LLP, the China-based member of BDO International Ltd., as its independent registered public accounting firm, replacing BDO Limited, the Hong Kong member of BDO International Ltd. The company dismissed BDO HK as its auditor on Dec. 21, 2011.
SkyPeople Appoints New Accounting Firm
China-based SkyPeople Fruit Juice Inc. (Nasqaq: SPU) announced that it has engaged Paritz & Company, P.A. to serve as its independent registered public accounting firm, effective as of Dec. 24, 2011. The firm replaces BDO Ltd., which was dismissed on Dec. 23, 2011. SkyPeople said that the decision to change auditors was not the result of any disagreements between the company and BDO on any matters of accounting principles or practices, financial statement disclosure or auditing scope or procedures. SkyPeople produces fruit juice concentrates.
PEOPLE
Management Moves at Global Sources
Hong Kong-based Global Sources Ltd. (Nasdaq: GSOL) completed the planned transition of its chief operation officer (COO) and chief information officer (CIO). Peter Zapf, who had served as COO, now serves as CIO, replacing Bill Georgiou. Georgiou is scheduled to retire as an employee at the end of February, 2012. Brent Barns, formerly the general manager of content & community development, has replaced Zapf as COO. Global Sources is a business-to-business media company and a facilitator of trade with Greater China.
Haus Resigns from Nutrifruit Board
China-based China Nutrifruit Group Ltd. (NYSE Amex: CNGL) announced that William P. Haus has resigned from the company’s board of directors, effective Dec. 29, 2011. Haus previously served as chairman of the compensation committee of the board. The company is actively searching for a candidate with similar expertise and experience to fill in the vacancy. China Nutrifruit is engaged in developing, processing, marketing and distributing a variety of food products processed primarily from premium specialty fruits grown in Northeast China, including golden berry, crab apple, blueberry, seabuckthorn, blackcurrant and raspberry.
VisionChina Makes Board Changes on Audit Committee
Beijing-based VisionChina Media Inc. (Nasdaq: VISN) announced changes to the company’s board of directors. Mr. Arthur Wong and Mr. Daniel Shih have been appointed as independent director and Ms. Xisong Tan’s independent director of the company’s board of directors. Wong, Shih and Tan will make up the audit committee of the board of directors and Wong has been appointed chairman of audit committee. Mr. William Decker and Ms.Yunli Lou have stepped down from their positions as independent directors because their current tenures expired, but both will act as senior consultants to the company.
- Wong has served as CFO of GreenTree Inns Hotel Management Group, Inc. Prior to that, he was Asia New Energy Holding and Nobao Renewable Energy Holdings Ltd. Wong worked for Deloitte Touche Tohmatsu in Hong Kong, San Jose and Beijing as a partner in the Beijing office. He received a bachelor’s degree in applied economics from the University of San Francisco and a higher diploma of accountancy from Hong Kong Polytechnic University.
- Shih has served as deputy chairman and group strategy officer at Stella International Holdings Ltd. He worked for PepsiCo (China) serving as chairman of PepsiCo (China) Investment Ltd. and as president of the China region for PepsiCo’s Beverages Business Unit. He was president of Motorola (China) Electronic Ltd., where he was responsible for setting, managing and executing on the growth strategy for Motorola in China. Shih received a master of science in electrical engineering from the University of Cincinnati in 1977 and a bachelor of science in electrical engineering from Tatung Institute of Technology in 1974.
VisionChina Media Inc. operates an out-of-home advertising network on mass transportation systems, including buses and subways.
L&L Appoints Political Heavy Weight, Edmund Moy, to Board
L&L Energy Inc. (Nasdaq: LLEN), which operates in China, but has its corporate offices in Seattle, announced that the company has appointed Edmund Moy to the company’s board of directors. Moy will serve concurrently as V.P. of Corporate Infrastructure and a non-independent board member. He replaces Robert Lee, who is vacating his position for personal reasons. Before L&L Energy Inc, Moy served as the 38th Director of the United States Mint at the U.S. Department of the Treasury from Sept. 2006 through Jan. 2011. From 2001-2006, he served in the White House as a Special Assistant to the President of the United States. He was a private equity consultant with clients including Welsh, Carson, Anderson & Stowe and was a sales and marketing executive with Blue Cross Blue Shield. Moy earned a B.A. from the University of Wisconsin with a triple major in economics, international relations, and political science. He has served as a director of several for-profit companies and charitable, religious, and fraternal organizations and has an endorsement contract with Morgan Gold.
