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Hong Kong's biggest corporate failure, Akai Holdings, is being used for a backdoor listing in a deal that will provide creditors with about HK$33 million in cash and stock - less than 1 per cent of the firm's estimated net debt of HK$6 billion.

Akai's listing status will be replaced by Newco into which the assets of casual clothes retailer Hang Ten will be injected via a string of complex transactions.

Akai's debts will not have any impact on Hang Ten after the restructuring. The delisted Akai and its debts will remain under the control of liquidators.

The creditors and liquidator will receive HK$12 million in cash and 2.1 billion Newco shares. Each share in transactions forming the new listing entity is valued at about one HK cent.

Akai shareholders will receive a total of 300 million shares, worth about HK$3 million, in the new listed company.

Hang Ten will be injected into Newco for HK$915.8 million payable in the new listing's stock.

The Kung family is the major shareholder of Hang Ten, with 73 per cent, while Hong Kong-listed clothing manufacturer YGM Trading holds 25 per cent.

Following the restructuring, the Kung family will hold 70.15 per cent and YGM 24.02 per cent. Akai's creditors will hold 2.14 per cent of the restructured firm and its shareholders will have a 0.3 per cent stake.

The whole series of transactions to facilitate the listing of Hang Ten will only proceed with approval of Akai shareholders, creditors and the regulators.

If approved, dealing in the restructured company is expected to start on October 22.

Trading in Akai shares was suspended in August 2000 after the High Court ruled the firm be wound up.

Despite Akai's delisting, liquidators will continue to search for assets to generate more money to distribute to creditors. Akai is alleged to have pilfered funds and misappropriated assets.

Liquidators have been unable to trace Akai's chairman, James Ting, to help recover more assets.

Hang Ten's business activities are mainly conducted through 97 per cent-owned subsidiary ILC International, which had a net asset value of HK$341.9 million as of March last year.

Back door - Business 2, Page 1



Akai provides vehicle for backdoor listing