Embattled mainland fabric maker Hontex International Holdings, accused by the Securities and Futures Commission of deception and fraud, admitted yesterday to making misleading statements during its December share sale and said it plans to compensate investors.
Hontex, whose HK$1 billion in listing proceeds have been frozen by a court order since March, said preliminary results of an investigation by its audit committee concluded that 'reliance cannot be placed upon the statements made in the company's IPO prospectus'. In a stock exchange announcement, it said: 'In light of these findings, the board has concluded that investors of the company should be compensated.'
The admission marks a sharp about-face for Hontex's Taiwanese founder and chairman, Shao Ten-po, who in April told media in Taiwan that 'the whole saga is only a misunderstanding caused by different interpretations of accounting treatments in Hong Kong and on the mainland.
'After I sort everything out, I will explain everything in Hong Kong,' Shao was quoted as saying.
Hontex is a Fujian-based maker of sports fabrics that began trading on the Hong Kong stock market on Christmas Eve last year. Taiwanese financial firm Mega Capital was the sole bookrunner on the deal.
But a record 64 days after Hontex's debut, the SFC ordered the shares to suspend trading and took the unprecedented step of securing a court order freezing the company's listing proceeds.
