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BIZCHINA> Top Biz News
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Gome shares dip as Hong Kong court freezes Huang's assets
By Ding Qingfen and Lillian Liu (China Daily)
Updated: 2009-08-08 08:25 Shares in retailer Gome, dubbed China's Best Buy, declined sharply on Friday after a Hong Kong court decided to freeze assets worth HK$1.66 billion held by its former chairman Huang Guangyu. Though investors remained concerned over the cash flow problems at the retailer, analysts continued to maintain a bullish outlook. The asset freeze comes after the Hong Kong securities regulator moved the court to prevent Huang and his wife Du Juan and two holding companies from disposing of or trading in Gome's shares. Reacting to the news, Gome shares fell to a low of HK$2.33 in intraday trading before closing at HK$2.37, still down 7.78 percent from the previous close of HK$2.57.
The company's shares had resumed trading in June after a seven-month suspension and soared nearly 150 percent after it entered into a refinancing deal with US private equity firm Bain Capital. On June 23, Bain Capital agreed to underwrite an open offer for up to a quarter of Gome's shares. He Yangqing, spokesperson of Gome, was not immediately reachable for comments. The company in a statement to the Hong Kong bourse said, "Gome was not approached by any regulators or judicial authorities in relation to any court order, and will keep investors informed as when we get any updated news." "The court order dented investors' confidence. But I think it's only a transient as Huang no longer chairs the board," said Winnie Fong, analyst, Taifook Securities. "I believe the company enjoys good profitability in the long term. Investors are now just unsure about the situation and would change their stance once the dust has settled," she said.
Patrick Yiu, director, CASH Asset Management, was quoted by Reuters as saying that "investors were taking profit, but it also provided a good buying opportunity if investors believe in the future outlook because of Gome's large distribution network and management team". Although Huang is still in police custody for alleged economic crimes, he has been quite active in the equity market. Fearing that his dominant position as the largest shareholder would be hurt as a result of the open share offer by Gome in late June, he bought back 816.32 million shares at HK$0.672 each in July after selling 235 million Gome shares at HK$1.704 each. The transaction helped increase his stake in Gome from 33.7 percent to 34 percent. Gome executives have tried to allay investor fears by emphasizing that the Huang scandal has nothing to do with the corporate business. (For more biz stories, please visit Industries)
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