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China Saite Group (0153.HK)
18-06-2019, 07:35 PM.
Post: #1
China Saite Group (0153.HK)
China's oldest brokerage Shenwan Hongyuan accuses cornerstone investor of defaulting on share payments in Hong Kong’s biggest IPO of 2019
* Shenwan Hongyuan claims China Saite, a construction services company, has defaulted on stock subscriptions worth HK$233 million (US$29.74 million)
* Brokerage offered its Hong Kong shares at HK$3.63 in April, raising US$1.16 billion in the city’s biggest IPO of the year

Xie Yu
Published: 1:49pm, 18 Jun, 2019

China’s oldest securities firm Shenwan Hongyuan has named and shamed one of its cornerstone investors for failing to pay for stock subscriptions made during its recent initial public offering (IPO) in Hong Kong.

The brokerage said China Saite, a construction services firm, had defaulted on payments for almost 65 million shares during its US$1.16 billion IPO, the biggest in Hong Kong so far this year. It said it was considering legal action against the company.

China Saite agreed to buy 64,193,600 H shares at HK$3.63 each as a cornerstone investor, according to an earlier announcement made by Saite. That makes the default value HK$233 million (US$29.74 million).

Analysts said it was extremely rare for cornerstone investors to fail to meet their financial obligations.

“As of the date of this announcement, China Saite and Saite Group failed to make any payment for the H shares originally allocated to China Saite, which constitutes a default … the company reserves all of their rights against China Saite and Saite Group … including but not limited to, taking legal action for all losses and damages,” Shenwan Hongyuan said in a filing to the stock exchange on Monday night.

China Saite, also a Hong Kong-listed entity, had made an agreement with Shenwan Hongyuan to buy the H shares offered by the latter during its Hong Kong listing, but both parties had agreed to delay the delivery of the shares, according to earlier filings. China Saite had agreed to make the payment before May 17, according to a filing by Shenwan Hongyuan on May 20.

China Saite confirmed the termination of the deal in a filing on Monday night, without providing reasons for the default. Calls to the company on Tuesday morning went unanswered.

Shares of Shenwan Hongyuan dropped by as much as 15 per cent to an intraday low of HK$3.10 during its first day trading, and have been struggling to recover since then.

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