Fushi Copperweld: A Christmas Introduce From The China Evolution Banking Corporation Together With Abax Captial To Arb Funds
For the record: I lost on this one. See press release has hence far non been filed amongst the SEC. To quote: "[b]ased on information provided past times Green Dynasty, the Company anticipates closing of the transaction past times or on Monday, Dec 24, 2012."
If the bargain closes it volition hold upwards a squeamish Christmas nowadays from the Chinese to diverse arb funds because this bargain has had a fatty spread for much of its existence.
History of this transaction
If the bargain closes it volition hold upwards a squeamish Christmas nowadays from the Chinese to diverse arb funds because this bargain has had a fatty spread for much of its existence.
History of this transaction
This transaction has history. It was outset proposed past times the chairman in November 2010 at $11.50 - but afterwards withdrawn. The Chairman came dorsum amongst a $9.25 offering as well as revised that offering to $9.50 which was accepted.
The stock is non without controversy. Muddy Waters (of Sino Forest fame) has alleged Fushi is a fraud. Bronte was curt a pocket-size amount good before the Muddy Waters statement (and shorted the master $11.50 offer) because the accounts were a piddling unusual. This was a stock on which nosotros won-some, nosotros lost some.
Even if the fellowship is a fraud that does non hateful the bargain volition non close. There were credible allegations of fraud against Harbin Electric as well as the accounts were decidedly funky - but the bargain did unopen as well as many shorts (including Bronte) received a nastier than commons flogging.
Moreover Harbin was taken mortal past times Abax Capital backed past times Red People's Republic of China Development Bank. The same combination taking Fushi private. That I am curt ane time to a greater extent than (and inwards this fourth dimension inwards quantity) indicates that I am some variety of masochistic sucker for punishment.
Why fraudulent Chinese companies were taken private
There is a theory every bit to why some Chinese companies amongst fraudulent accounts were taken private. About a decade agone yous could non purchase industrial terra firma unopen to Shanghai as well as other cities unless yous had a concern to pose on that land.
So people invented fictional businesses to purchase existent land.
Later they opposite merged those fictional businesses into the States as well as sold shares inwards the fictional businesses. In some cases the terra firma appreciated plenty to brand the stock worthwhile fifty-fifty though the accounts are fictional. I know this to hold upwards truthful inwards at to the lowest degree ane instance (a instance on which I lost money). I am non surely whether it is truthful of Harbin but Harbin Electric did ain lots of land.
There is some other argue why Chinese companies are taken private. And that is the functioning was originally the children of Chinese elites ripping off Western stock markets (by selling fraudulent stocks). When that no longer worked they had no shame. Now they ripped off Chinese banks past times getting them to finance LBOs. I know of at to the lowest degree ane fraud run past times a kid of a fundamental commission fellow member that received a bid from a good connected Chinese mortal equity fund.
Back to Fushi Copperweld.
The Fushi Copperweld saga is long running. Now it is a uncomplicated enquiry of whether the bargain volition unopen as well as today is the solar daytime of truth.
It is probable to close. It is non over until the fat-lady sings - but she is clearing her throat.
But imagine it does non close. Then it volition probable hold upwards because the fraud allegations are substantially right as well as the stock should eventually merchandise at pennies. There volition hold upwards a few arb funds amongst some 'splaining to do. (See this disclosure from Centaurus Capital for an example.)
Boiler plate
When examining situations similar this its best to read the boiler plate.
The boiler plate inwards diverse disclosures has changed recently.
Influenza A virus subtype H5N1 press unloose dated 28 June 2012 and filed amongst the SEC says categorically:
The press unloose of 17 Dec 2012 - the ane non filed amongst the SEC - but which postpones closing until 24 Dec says:
"Effecting the satisfaction of all weather necessary to clit all necessary funds" is a somewhat weaker argument than "there is no financing status to completion of the merger".
All I tin say for the arb funds involved. This ameliorate close. Or yous are belongings a rattling weak paw indeed.
But hence I direct maintain never seen a bargain neglect hence close the line. It should unopen as well as past times unopen of concern today the stock volition direct maintain disappeared as well as shareholders volition hold upwards entitled to have $9.50 per portion from the clearing corporation. And I volition direct maintain lost a few pennies on my curt (just inwards fourth dimension for Christmas).
Whatever happens - I promise yous all direct maintain a merry as well as rubber Christmas (or festive flavor if Christmas is non your thing).
John
PS. After marketplace now. So far the fatty lady has non sung...
PPS: On Fri - merely before closing - the marketplace got a piddling jittery close this. Check out the one-day chart. Someone panicked. (I was shorting before inwards the week.)
The stock is non without controversy. Muddy Waters (of Sino Forest fame) has alleged Fushi is a fraud. Bronte was curt a pocket-size amount good before the Muddy Waters statement (and shorted the master $11.50 offer) because the accounts were a piddling unusual. This was a stock on which nosotros won-some, nosotros lost some.
Even if the fellowship is a fraud that does non hateful the bargain volition non close. There were credible allegations of fraud against Harbin Electric as well as the accounts were decidedly funky - but the bargain did unopen as well as many shorts (including Bronte) received a nastier than commons flogging.
Moreover Harbin was taken mortal past times Abax Capital backed past times Red People's Republic of China Development Bank. The same combination taking Fushi private. That I am curt ane time to a greater extent than (and inwards this fourth dimension inwards quantity) indicates that I am some variety of masochistic sucker for punishment.
Why fraudulent Chinese companies were taken private
There is a theory every bit to why some Chinese companies amongst fraudulent accounts were taken private. About a decade agone yous could non purchase industrial terra firma unopen to Shanghai as well as other cities unless yous had a concern to pose on that land.
So people invented fictional businesses to purchase existent land.
Later they opposite merged those fictional businesses into the States as well as sold shares inwards the fictional businesses. In some cases the terra firma appreciated plenty to brand the stock worthwhile fifty-fifty though the accounts are fictional. I know this to hold upwards truthful inwards at to the lowest degree ane instance (a instance on which I lost money). I am non surely whether it is truthful of Harbin but Harbin Electric did ain lots of land.
There is some other argue why Chinese companies are taken private. And that is the functioning was originally the children of Chinese elites ripping off Western stock markets (by selling fraudulent stocks). When that no longer worked they had no shame. Now they ripped off Chinese banks past times getting them to finance LBOs. I know of at to the lowest degree ane fraud run past times a kid of a fundamental commission fellow member that received a bid from a good connected Chinese mortal equity fund.
Back to Fushi Copperweld.
The Fushi Copperweld saga is long running. Now it is a uncomplicated enquiry of whether the bargain volition unopen as well as today is the solar daytime of truth.
It is probable to close. It is non over until the fat-lady sings - but she is clearing her throat.
But imagine it does non close. Then it volition probable hold upwards because the fraud allegations are substantially right as well as the stock should eventually merchandise at pennies. There volition hold upwards a few arb funds amongst some 'splaining to do. (See this disclosure from Centaurus Capital for an example.)
Boiler plate
When examining situations similar this its best to read the boiler plate.
The boiler plate inwards diverse disclosures has changed recently.
Influenza A virus subtype H5N1 press unloose dated 28 June 2012 and filed amongst the SEC says categorically:
There is no financing status to completion of the merger. Mr. Fu as well as Abax direct maintain secured fully committed debt financing from Red People's Republic of China Development Bank Corporation Hong Kong Branch to finance the transaction.The press unloose of xi Dec 2012 says that the bargain volition unopen "this week" (a calendar week at ane time good as well as genuinely past). However it introduces a novel paragraph into the boiler-plate forrad looking statements.
Influenza A virus subtype H5N1 pose out of the matters discussed herein that are non historical or electrical current facts bargain amongst potential time to come circumstances as well as developments, inwards particular, whether as well as when the transactions contemplated past times the Merger Agreement volition hold upwards consummated. The word of such matters is qualified past times the inherent risks as well as uncertainties surrounding time to come expectations to a greater extent than oft than non as well as every bit good may materially differ from actual time to come sense involving whatever ane or to a greater extent than of such matters. Such risks as well as uncertainties include: whatever weather imposed on the parties inwards connective amongst consummation of the transactions described herein; satisfaction of diverse other weather to the closing of the transactions described herein; as well as the risks that are described from fourth dimension to fourth dimension inwards the Company's reports filed amongst the SEC.
The press unloose of 17 Dec 2012 - the ane non filed amongst the SEC - but which postpones closing until 24 Dec says:
"As previously announced, on Dec 11, 2012, the Company's stockholders approved the Merger Agreement. Green Dynasty has advised the Company that it is inwards the procedure of effecting the satisfaction of all weather to clit all necessary funds pursuant to the facility understanding amongst the Red People's Republic of China Development Bank inwards guild to cease the proposed merger. Based on information provided past times Green Dynasty, the Company anticipates closing of the transaction past times or on Monday, Dec 24, 2012."
"Effecting the satisfaction of all weather necessary to clit all necessary funds" is a somewhat weaker argument than "there is no financing status to completion of the merger".
All I tin say for the arb funds involved. This ameliorate close. Or yous are belongings a rattling weak paw indeed.
But hence I direct maintain never seen a bargain neglect hence close the line. It should unopen as well as past times unopen of concern today the stock volition direct maintain disappeared as well as shareholders volition hold upwards entitled to have $9.50 per portion from the clearing corporation. And I volition direct maintain lost a few pennies on my curt (just inwards fourth dimension for Christmas).
Whatever happens - I promise yous all direct maintain a merry as well as rubber Christmas (or festive flavor if Christmas is non your thing).
John
PS. After marketplace now. So far the fatty lady has non sung...
PPS: On Fri - merely before closing - the marketplace got a piddling jittery close this. Check out the one-day chart. Someone panicked. (I was shorting before inwards the week.)
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