Suspended Hontex eager to resume trading amid possible delisting
Suspended since 2009, sport fabric maker says exchange may seek its delisting
The Hong Kong Stock Exchange is seeking to delist Hontex International Holdings, but the troubled firm is fighting to remain listed and have trading resume on its suspended shares.
The sport fabric maker received a letter dated November 7 from the stock exchange saying the exchange's listing division intends to recommend that the listing committee delist the company, Hontex announced last night.
"The company intends to maintain its listing status and has been working with its advisers on a proposal to resume trading of its shares. The company will provide a submission to the stock exchange in due course," Hontex said.
"If Hontex wants to retain its listing and resume trading, it has to get up to date with all its accounts and restore its free float. It's virtually the same as re-applying for an IPO. It has to remarket its shares. Hontex has not published any accounts since listing in 2009. That is a serious breach of listing rules," said corporate governance activist David Webb.
To remain listed, a company must maintain a minimum public float of 25 per cent. Only 0.4 per cent of Hontex's shares remains in the public float, according to Webb's website.
Hontex was listed on December 24, 2009 but the Securities and Futures Commission (SFC) suspended the stock in March 2010 after just 64 days of trading.
In June this year, the courts ordered the company to refund HK$1.03 billion to small shareholders through share buybacks, after the SFC alleged it had provided misleading information by overstating its profit and turnover figures in its listing prospectus in 2009.
The commission alleged that Hontex's prospectus overstated its turnover by 380 million yuan in 2006, 708 million yuan in 2007 and 974 million yuan in 2008.
At the close of its share buyback offer on October 29, public shareholders agreed to sell back 24.68 per cent of Hontex in order to be refunded, the company announced on the same day.
"It's a very unusual situation. There has never been a case where SFC required a company to buy back the shares it issued in its IPO," Webb said.
"For the shareholders who still own the tiny portion of remaining public shares, they risk holding shares in an un- listed company if Hontex is delisted. Delisting is logically the thing to do when there are virtually no public shares left," Webb added.