Wonson hedges buying of metal
Aluminium ingots-maker Wonson International is attempting to protect its 51 per cent-held subsidiary - Shangqiu Yonghe Aluminium - from an almost 30 per cent rise in prices in the past year.
The company's listing prospectus released last July said a rise of 1 per cent would result in a 771,000 yuan (about HK$717,030) decline in Shangqiu's profit if the costs were not passed on to customers.
Chairman Chiu Tao, after the company's annual general meeting yesterday, said Wonson hedged its aluminium buying in the international market, which should mitigate the loss.
Wonson was found to have used about $25 million of its listing proceeds of $90 million to buy inventories earlier this year, a fact not mentioned in the prospectus.
The stock exchange said it had reserved the right to take action against the company.
Mr Chiu said about $1 million of the proceeds had been used for setting up offices, with another $29 million to be placed in a reserve fund.
'Owing to the global economic downturn, we decided to rent instead of buy office premises, however, our plan to set up offices remains unchanged.' Meanwhile, Mr Chiu said a bankruptcy proceeding filed against him by a financial institution seeking repayment of $49 million had been cancelled.
