Bloomberg News

Chinasoft May Revive U.S. Listing Plan Next Year, CEO Says

June 16, 2011

(Updates with CEO’s comments in the fourth paragraph.)

June 16 (Bloomberg) -- Chinasoft International Ltd., a Chinese software company part-owned by Microsoft Corp., said it may revive a proposal to list stock in the U.S. next year after postponing the planned offering this month.

“We are continuing to review the proposal,” Chief Executive Officer Henry Chen said in an interview in Hong Kong today. Delaying the planned listing of American depositary receipts will also give Chinasoft more time to work on the financing deal with Hony Capital Ltd. that was announced this month, he said.

Chinasoft is among companies in China that have postponed possible capital-raising plans amid increased investor scrutiny of stock and debt issuers from the Asian country. Overseas- listed Chinese stocks including Longtop Financial Technologies Ltd. and Sino-Forest Corp. have declined in the past month as investors raised concerns about corporate governance.

“Market conditions are not good at the moment,” Chen said. Investor concerns are “a factor” in the decision to delay the ADR listing, and Chinasoft has no financing needs at present, he said.

The proposed ADR listing is “unlikely to be achievable” by September as planned, Beijing-based Chinasoft said on June 7. China Qinfa Group Ltd., a Chinese coal company, said this week it postponed a planned sale of U.S. dollar bonds, without providing an explanation.

Muddy Waters

Muddy Waters LLC, run by short seller Carson Block, this month said Sino-Forest overstated its timber holdings in China, sending the forestry company’s shares plunging in Toronto. Sino- Forest has denied the allegations.

Longtop Financial, a software maker in China, said last month that auditor Deloitte Touche Tohmatsu Ltd. resigned and a U.S. regulator started a probe of the company’s financial reports.

Hony Capital, a private equity fund backed by China’s Legend Holdings Ltd., agreed to invest HK$279 million ($36 million) to increase its stake in Chinasoft, the software company said on June 8. Hony will become Chinasoft’s biggest investor with a 19 percent stake after the completion of the transaction, Chen said.

“All countries have bad companies, and in China, you can find some of the world’s very best-run companies,” Hony’s CEO John Zhao said today. Hony expects “years of very high growth” at Chinasoft, Zhao said.

--Editors: Anand Krishnamoorthy, Suresh Seshadri.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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