Hong Kong Freezes Executive’s Assets After Short-Seller Attackby and
Tech Pro had denied Glaucus report saying stock was worthless
Shares dropped most in five weeks in Hong Kong on Wednesday
The chairman of Tech Pro Technology Development Ltd., an LED lighting product maker deemed worthless by short-seller Glaucus Research Group, has had some of his assets frozen by a Hong Kong court and also faces a bankruptcy claim.
The High Court on Aug. 30 granted a Mareva injunction covering up to HK$11.2 million ($1.4 million) of Li Wing Sang’s assets in the city, Tech Pro said in a filing to the city’s stock exchange on Wednesday evening.
Citic Securities Brokerage (HK) Ltd., a wholly-owned subsidiary of Citic Securities International, filed a claim for bankruptcy proceedings against Li on Sept. 12, according to a court document seen by Bloomberg News at Hong Kong’s High Court. The address shown for Li in the court document is the same as Tech Pro’s office address, although it does not name Tech Pro specifically.
The legal issues are Li’s personal matters and not related to the company’s business, Tech Pro said in the filing. The chairman hasn’t provided any financial assistance or guarantee to the company, it said.
Citic Securities International earlier declined to comment on a case in legal proceedings. Attempts on Wednesday to reach Li for comment at his office and at a residential address shown in a previous court filing were unsuccessful.
Tech Pro’s shares have plunged 92 percent since Glaucus’s report on July 28 rated the company a “strong sell" and said the stock isn’t worth anything. Tech Pro demanded an apology, saying the report "has no merit" and is “defamatory”, according to an Aug. 29 regulatory filing in which the company pointed out Glaucus would make money by driving the stock lower. GeoInvesting LLC vice president Dan David had recommended shorting the shares of Tech Pro at the 2016 Sohn Conference Hong Kong in June.
The company’s shares closed 13 percent lower at 17.2 Hong Kong cents on Wednesday, the biggest one-day drop in five weeks. In its stock exchange statement, Tech Pro said it wasn’t aware of any reasons for the move beyond the legal matters.
Hong Kong companies have faced short-seller attacks before with some drawing the attention of the city’s regulators. A Hong Kong tribunal last month said U.S. short-seller Andrew Left was culpable of market misconduct for a report that his Citron Research firm published about Evergrande Real Estate Group Ltd., now called China Evergrande Group. It was the second time in recent months the city’s authorities have ruled against analysts for issuing negative research. Left has said the opinions published were truthful and he would consider all options for appeal.
Citic Securities’ bankruptcy claim came after other demands for the Tech Pro chairman to repay debt. Credit Suisse Group AG, China International Capital Corp. and SinoPac Securities Corp. have made claims in connection with HK$118.2 million of debt, according to writs filed in Hong Kong’s High Court from Aug. 4 to Sept. 5.
The chairman held 1.38 billion shares in Tech Pro before Glaucus’s report was published on July 28. Li had pledged Tech Pro stock as collateral for margin financing and about 614 million shares were sold by brokers from July 28 to Aug. 4, according to stock exchange filings.
Li’s stake in the company was valued at HK$131.3 million on Wednesday, compared with HK$3.13 billion on July 27. Tech Pro also owns France’s Sochaux-Montbeliard football team.