Hong Kong, Sept 10, 2014 - (ACN Newswire) - Tianhe Chemicals (Stock Code: 1619.HK) is preparing a full rebuttal against attacks from Anonymous Analytics, a short selling organization, in the form of a clarification announcement, as people familiar with the matter said. Shares will remain suspended until the formal clarification is published.
According to Wall Street Journal, Tianhe Chemicals CEO Wei Xuan acted fast after the AA report was published. In Boston at the time, Mr. Wei asked the Hong Kong stock exchange to suspend trading in the company's shares. A brief statement was swiftly announced by the company to the Hong Kong stock exchange saying the allegations were inaccurate, followed by the one on last Friday calling Anonymous' charges "false, misleading and malicious."
According to Reuters, Morgan Stanley Private Equity Asia (MSPEA) is the largest institutional investor in Tianhe Chemicals, with 8.6 percent of the company's stock, and the bank also has 27 percent of the MSPEA fund which invested in Tianhe Chemicals. Before MSPEA's $300 million investment in Tianhe Chemicals in 2012, it spent over $2 million on third-party diligence work over a three-year period. Such in-depth diligence check would usually involve deep reviews on the company's financials, its production facilities and its customer base.
Anonymous Analytics, on the other hand, says it conducted all of its investigations using public information, in addition to a few visits to the offices of Tianhe customers in Shanghai.
Reuters also points out that while Anonymous has a patchy record of success with its reports, Morgan Stanley's unit has never made a loss on a China investment in over 20 years of deals, a record that is the envy of peers who have suffered reputational and financial damage from claims of fraud at their China portfolio companies. In addition, MSPEA actively promoted the Tianhe Chemicals investment when it was raising its fourth and biggest Asia fund of $1.7 billion.
Homer Sun, MSPEA's chief investment officer and head of its China investments team, sits on the Tianhe Chemicals board as a non-executive director, along with specialists whose background includes stints at Dupont, Conoco and Standard Oil.
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