• Sat
  • Dec 20, 2014
  • Updated: 11:23pm

Kelon issues profit warning after probe by regulator

PUBLISHED : Thursday, 28 April, 2005, 12:00am
UPDATED : Thursday, 28 April, 2005, 12:00am
 

CSRC looking into fund transfers between firms linked to the company boss


Guangdong Kelon Electrical Holdings issued a stern profit warning yesterday, amid reports that mainland authorities have launched a new probe into several companies controlled by its chairman Koo Chu-kwan.


A spokesman for the white goods manufacturer said yesterday that the China Securities Regulatory Commission (CSRC) was investigating Kelon for evidence of illegal transfers of funds between connected firms.


Kelon was censured by Hong Kong regulators for similar improprieties earlier this year.


'There is an investigation,' the spokesman said. 'If there is wrongdoing, there will be consequences.'


In a statement to the Hong Kong Exchanges and Clearing (HKEx), Kelon said it might post net losses of 60 million yuan for last year after a 202 million yuan net profit in 2003.


Sales in the fourth quarter of last year decreased significantly, while the company would write off $71 million from jointly owned Huayi Compressor Holdings.


Kelon also warned of a $30 million rise in bad debt provisions for the fourth quarter. Its shares dived 16.31 per cent yesterday to $1.18 on heavy trading volume of 16.97 million shares.


Sing Tao Daily reported yesterday, citing mainland media, that the CSRC was investigating whether Greencool Technology Holdings, listed on the Growth Enterprise Market (GEM), misappropriated funds from Kelon during the acquisition of three other mainland companies in 2003.


One of those firms was mainland-listed appliance maker Meiling Electrical, which, like Greencool and Kelon, is headed and controlled by Mr Koo.


Sing Tao quoted mainland press reports as saying that last week, the CSRC in Anhui province raided the offices of Meiling Electrical.


Jover Wong, a spokeswoman for Greencool, denied the Sing Tao report, saying Greencool had no involvement in the acquisition of the three firms in question and therefore could not have misappropriated funds from Kelon.


In January, the GEM listing committee censured Mr Koo and other Greencool executives for failing to make timely disclosure and obtain shareholder approval for transactions in 2001 worth 230 million yuan with Tianjin Greencool Factory, also controlled by Mr Koo.


It is unclear whether CSRC investigators are probing the same transactions.


Over the past few years, Mr Koo has built a network of connected firms. He gained controlling stakes in Kelon in 2001 and Meiling Electrical in 2003.


Kelon's problems with the HKEx predate Mr Koo.


Last month, the exchange censured seven former executive directors of Kelon for failing to seek shareholder approval and making timely disclosures of 1.26 billion yuan of connected-party transactions made before 2002.


All seven directors had resigned from Kelon between 1999 and 2001.


Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or