Tech Pro Chair Faces Bankruptcy Claim After Short-Seller Attackby and
Tech Pro had denied Glaucus report saying stock worthless
Shares drop the 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, is also facing bankruptcy claims in a Hong Kong court.
Citic Securities Brokerage (HK) Ltd., a wholly-owned subsidiary of Citic Securities International, filed a claim for bankruptcy proceedings against Li Wing Sang 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.
Tech Pro “has no comment as this is Mr Li’s personal affairs,” Candy Tam, an external public relations spokeswoman for Tech Pro said by e-mail. Citic Securities International said it has no comment regarding a case that is in legal proceedings. Attempts on Wednesday to reach Li for comment at his office and at a residential address shown for Li 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 fell 11 percent in its biggest one-day drop in five weeks, to 17.6 Hong Kong cents at noon local time.
Hong Kong-listed companies have come under 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 would consider all options for appeal.
Citic Securities’ bankruptcy claim came after three lenders demanded the Tech Pro chairman to repay outstanding debt. Credit Suisse Group AG, China International Capital Corp. and SinoPac Securities Corp. have made claims against Li to settle HK$118.2 million ($15.2 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.
Tech Pro’s shares closed at 19.8 Hong Kong cents on Tuesday, valuing Li’s stake in the company at HK$151.2 million, compared with HK$3.13 billion on July 27. Tech Pro also owns France’s Sochaux-Montbeliard football team.