Delisting looms for Euro-Asia after rescue deadline passes
Provisional liquidators come up empty-handed in search for those willing to undertake restructuring
Euro-Asia Agricultural (Holdings), once the poster child for private enterprise in China, could be delisted from Hong Kong's main board after its provisional liquidators failed to produce a new restructuring proposal by Saturday's deadline.
A delisting would represent the start of the final chapter for the horticultural firm following its precipitous fall from grace amid allegations of massive fraud. Euro-Asia has been suspended from trading since September 30, 2002, shortly before its controlling shareholder, flamboyant mainland tycoon Yang Bin, was detained on the mainland for financial crimes that eventually resulted in an 18-year prison sentence.
The exchange said in October that it intended to cancel Euro-Asia's listing unless 'a valid resumption proposal' was submitted by the end of a final six-month reprieve, which expired on Saturday.
It is understood no new restructuring proposal was submitted by Euro-Asia's High Court-appointed provisional liquidators - Derek K.Y. Lai and Darach Haughey of Deloitte Touche Tohmatsu - by the deadline.
A potential white knight withdrew an offer to buy control of the company after the stock exchange rejected the plan in March and said a resumption proposal would have to satisfactorily address allegations of fraud during Euro-Asia's July 2001 initial public offering. Euro-Asia was accused by the mainland securities regulator of inflating its revenue 20 times over four years to gain its listing.
The company also allegedly exaggerated the size of its greenhouse production facilities and used farmland illegally.
Following the withdrawal of the earlier plan, the provisional liquidators talked to two other potential investors who had previously expressed interest and remained tempted by Euro-Asia's listing status. However, the potential investors were deterred by the same stock exchange requirement, sources said yesterday.
Deloitte declined to comment yesterday. Officials at Chiyu Banking Corp, the BOC Hong Kong subsidiary which requested the appointment of provisional liquidators in the hope of recovering a $30 million loan from Euro-Asia, did not return phone calls.
A stock exchange spokesman dismissed criticism that unreasonable trading resumption requirements had been imposed on Euro-Asia. 'As a regulator, we have to ensure full compliance with our listing rules,' he said.
Euro-Asia's listing status is its only valuable asset in Hong Kong while most of its property, and even its financial records, are on the mainland, where Hong Kong-appointed liquidators find it hard to recover assets.
The provisional liquidators could request that Euro-Asia be wound up immediately at next Monday's High Court hearing.