Thursday 10th December 2009
Dear Reader,
Four new horror stories in one day - and the are all inter-related, so here's some holiday reading for you. And if you are wondering about our next Christmas Pick - we'll let you into a little secret: so are we!
Hong Kong Building and
Demolition
HKBLA (0145) has been a perennial cash shell. After 3 takeovers, its foundations
now appear to be under threat as its cash pile gets depleted on dubious
transactions, including investment in Byford and an "earnest deposit". It
appears to have become part of a network which includes at least 9 other listed
companies.
Value
Divergence, part 2
What's going on at Value Convergence (0821)? We list the placees in the
convertible bond issue, which has been delayed, and analyse their connections to
a network of other companies we have written about before. Is VC joining that
network? We also look at the massive dilution that awaits shareholders of China
Fortune (0290).
China Motion
Telecom - recent history
We examine the recent history of China Motion Telecom (0989), including two
aborted acquisitions and a highly dilutive placing "for working capital" at a
time when the company was flush with cash. Why did the board agree to that and
where did the shares go? We also query the sustainability of margins in a recent
acquisition from CMT's controlling shareholders.
China Vanguard's
Grand Promise
China Vanguard (8156) bought an asset from its controlling shareholder at 6.5
times the price at which China Motion (0989) turned it down. Now it is
struggling to redeem convertible bonds the target issued to Goldman Sachs and
Evolution Capital. We also query a year-end HK$139m cash outflow to buy a
company which was once owned by the controlling shareholder, with negative net
assets. Finally we look at a pending acquisition by Aptus, its subsidiary.
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