China Xinda Plastics Co., Ltd. is one of the major automotive engineering polymer composite materials suppliers in China and is listed on NASDAQ in the United States. At present, some US shareholders question the fairness of the company's privatization plan and gradually exert pressure.
On the March 15 conference call, some shareholders stated that the plans of Xinda, chairman of China Xinda, and Xinda, a private equity company owned by Morgan Stanley Asia (holding a 24% stake in Xinda), were slow and not Clearly, they feel more and more frustrated.
In February 2017, Han Jie and Morgan Stanley announced a plan to acquire 26% of Xinda shares not held by both parties at a price of US$91 million, which is higher than the company’s current stock price of approximately 30%.
However, other shareholders indicated that the stock price is still too low. They believe that the share price of Harbin-based China Xinda is obviously underestimated compared with other similar plastics material companies in China. This is something that Xinda's management has agreed with in the past.
Matthew Larsen, financial adviser to Wells Fargo Bank of America, said in a conference call: 'Hold down prices is one thing. This has been the same since 13 months. It is immoral in a way.'
Larson said that several of his Chinese Xinda investors were very dissatisfied and had discussed whether to advertise in the newspapers and expressed their concerns directly to Morgan Stanley’s senior management personnel. Morgan Stanley passed Morgan Stanley in 2011. A private equity company in Lea Asia invests US$100 million in China Xinda.
Larson said: 'I'm talking about those who are angry about this and even suggested that they be advertised in the Wall Street Journal in Asia, and that they should introduce retired persons from Morgan Stanley's senior management and ordinary people's attention rather than institutions.'
Larson mentioned that his clients believe that the purchase price is not significantly proportional to their investment. He said: 'They believe that the share price is about one-third of the book value in the United States is not a fair deal and there will be a class action lawyer involved.'
Jason Cooper of Stevenson Capital Management stated that the company seems to be 'seriously underestimated', and also mentioned that the company plans to invest US$400 million in new and expanded factories in China and Dubai this year, which has further aroused private ownership. The stock price should be higher discussion.
Cooper stated that all shareholders have the right to understand the contents of the report of the independent director special committee that is being drafted. The committee is evaluating the company's stock price for privatization. He said that if they do not know this information, other shareholders are evaluating stock prices and evaluating 'private acquisition activities'. Whether there is a conflict of interest' will be at a disadvantage.
He said: 'I think we will continue to pay attention to the progress of this matter. But I would recommend that all institutional shareholders and individual shareholders should solve this problem as soon as possible, because we do have rights and also have considerable institutional controlling power. We should not accept it. Low stock price. '
Zhang Dahe, chief financial officer of China Xinda, said that the company has not yet received the report, but the special committee will report the results to the board after receiving the report.
Zhang told Cooper: 'I fully understand your ideas', and said that after writing the report, the company will follow the legal advice to disclose information immediately.
Zhang said: 'I think your opinion has been well accepted. We believe our legal advisors and other advisors will make correct judgments. After making a decision, we will follow the relevant recommendations.'
Zhang said that as long as the privatization share price reaches a certain stage, the company will give a reasonable explanation to the outside world.
Several other analysts on the conference call also asked about issues related to the purchase price. These concerns stem from the fact that company executives described the progress of the large expansion plans announced before the implementation.
Zhang said that the company announced sales of US$1.29 billion in 2017 and is expected to invest US$400 million in the expansion projects in China’s Harbin and Sichuan provinces and in compound factories opened in Dubai this year.
The Sichuan plant will increase its annual production capacity of 661 million pounds, making the company's total capacity in China reach 1.52 billion pounds.
It is reported that the company is building a factory in Dubai with a capacity of 55.1 million pounds. It is expected that the factory will go online at the end of this year.
The company produces various types of engineering plastics, including nylon, acetal, polyphenylene oxide and polylactic acid.