The tightening of China's credit policy has made the privatization of China's Xinda Plastics Co., Ltd., which is listed in the US, complicated, and has also affected the company's sales performance. This is the information disclosed by the company's senior management.
The company's annual sales of about 1.3 billion US dollars, announced plans in early 2017, the senior management and investment bank Morgan Stanley plans to acquire the company, the company will be delisted from the Nasdaq.
However, some shareholders pointed out that the delisting pace is slow and the process lacks transparency. At the company's performance conference held on August 9, company officials said that the liquidity of China's financial sector has tightened, complicating the company's privatization process. Zhang Dahe, chief financial officer, said: 'At present, all of China is de-leveraging, and the banking sector is tightening liquidity. Many companies in China are facing this new and unexpected problem regardless of size.'
On August 9th, the company's report showed that sales in the second quarter were basically flat, up 1.2% to $317.3 million, and net profit fell 3.2% to $27.2 million. Chairman and CEO Han Jie said that nationwide de-leveraging The move affected many Chinese companies, including mergers and acquisitions and privatization. He added that the company will work to improve the capital structure as part of its expansion strategy.
Xinda is one of the largest manufacturers of automotive plastics in China. Shareholders are putting pressure on the company to explain the reasons for the delay in the privatization process. Han Jie said through translation that he has been communicating with large state-owned banks to find funds. Morgan Stanley In 2011, he invested 100 million US dollars in China Xinda and participated in the privatization work, but Han Jie said that the main financing responsibility is on him.
Wells Fargo financial adviser Matthew Larson urged the company to expand the scope of financing. He said: 'There is a lot of money outside, according to the company's valuation, there should be many parties interested in providing funds, there is no need to find a Chinese bank, You can find international private banks, they have available funds. '
Han Jie said that an investment company operated by its son, Han Jie, agreed to inject 75.6 million US dollars into Xinda's domestic subsidiary for daily manufacturing operations in July this year. There is also a fund from Changmu Investment (Beijing). ) Ltd., will help Xinda to obtain the necessary funds for operation and expansion.
Due to the proposed expansion plans, including the construction of a new plant in Sichuan, China, and the opening of new facilities in Dubai, some of Xinda’s minority shareholders questioned whether the privatization program was fair and whether the valuation was not included in the growth potential. Currently Han Jie and Morgan Stanley holds 74% of the company's shares, and other minority shareholders hold a total of 26% of the shares.
Larsen pointed out that since the company announced its privatization plan in February 2017, the stock price has been going down. He said: 'I have never seen this situation, usually close to the transaction, the stock price will go higher instead of lower. So everyone should Understand the frustration of minority shareholders, you have bought stocks of outstanding companies, the company has a good track record, and its position in China is also very good, and it has been expanding, but the stock price is on the downside.
Han Jie said that he could not understand the current performance of the company's stock price performance. But he once again pointed out that 'China's current financing situation is more and more challenging than in the past.'
Chief Financial Officer Zhang Dahe also believes that the sharp depreciation of the renminbi (10% depreciation in the second quarter) is one of the reasons that affect the privatization process.