Regent Pacific, the fund management group seeking a Hong Kong listing, has sought a mediator in a row over an investment in a Barbados-based company that produces medicinal products from shark cartilage. Regent's US$5 million stake in Cartilage Technologies (CT) was to be exited through a public offering. The CT offering became bogged down in legal and business problems affecting both CT and the price of Regent's holding. Regent Pacific took a stake in the company in April 1993 and currently has a 10 to 11 per cent holding involving its own and private investors' funds. Regent rejected CT's offer to buy back the original $21-a-share stake for between $3 and $5 per share. The investment has been hit by: A falling-out between Regent and CT management; A board-room dispute at CT which led to the founding partner, William Lane, leaving and setting up a competing firm; A Regent injunction to prevent CT making a backdoor listing; and A fall in CT's net income from $2.8 million in June 1994 to a loss of $1.8 million in the 1996 accounts. Peter Everington, Regent's investment director, said the CT board rejected original attempts to seek a Nasdaq listing. Regent issued an injunction following CT's bid to undertake a backdoor listing with Zachary Ventures, a shelf-company incorporated in the US state of Delaware, for the sole purpose of acquiring or merging with a business. Zachary, which was owned by two directors of CT, has no operating assets and has not been involved in any business activities, other than to locate and investigate other business for potential acquisition. In a letter to investors, Mr Everington said: 'We saw this as a completely unnecessary dilution of shareholders interests as well as being likely to lead to nothing better than a backdoor type of listing which would not provide any real liquidity.' There are believed to be three investors in CT in Hong Kong and seven in other parts of Asia. Mr Everington, whose company has nearly $2 billion under management, said he was concerned by recent developments, but said he was attempting to resolve the problem. 'We have always maintained that a full and proper listing on Nasdaq is the only appropriate and responsible way for this company to go forward,' he said. 'The company also stated the original placing agreement specifies the shares should not be issued at a discount to our price of $21 per share without its consent.' Mr Everington said Regent had appointed a third party to resolve the differences between the two companies. A spokesman for Cartilage was not available but the company wrote to shareholders last December claiming it was planning to diversify its product range and change its name to Biotherapies.