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ChinaCast Education Corporation (CAST) Message Board

  • traderjoe431@rocketmail.com traderjoe431 Sep 21, 2012 1:10 AM Flag

    Any recovery extremely unlikely

    As a lawyer who has worked on several US-listed PRC company go-private transactions, I can tell you unequivocally that any recovery is extremely unlikely without the full cooperation of the VIE shareholders, who remain estranged and hostile to the CAST board. As shown by the Alibaba-Yahoo case, US shareholders have little or no legal recourse in the Chinese courts. CAST actually had a very profitable, growing education business with significant assets but a clueless board that launched a costly, ill-advised proxy battle/hostile takeover of a PRC small-cap company without first securing the chops, business licenses, bank accounts and VIE structures (what were they thinking?). This ill-thought out exercise has resulted in CAST shareholders losing over 90% market value. Go figure.

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    • The fraud is clear in this case and thus the fact that the courts have issued them new chops and business licenses, allowing them to run the businesses already shows the courts have sided with the company. Who is in operational control of the company in your opinion? The VIE shareholders who received the fraudulent transfers of ownership in March or the current board and their management? My understanding is it is the latter. The fraudulent transfers are not likely to stand up, although that is certainly the risk.

      • 2 Replies to inncogneeto
      • Unfortunately, the PRC VIE shareholders, not the US public company, are in operational control of the business. True, the company has retrieved some chops and business operating licenses but it's a well known fact in China (talk to some Longtop Financial and China Media Express investors) that they will never get access to cash or assets since the PRC legal system is opaque and anti-foreigner. Sad to say, but it's just a matter of time now until the public company goes bankrupt paying off a bunch of useless lawyers/advisors leaving all the US shareholders screwed.

      • Unfortunately, the PRC VIE shareholders, not the US public company, are in operational control of the business. True, the company has retrieved some chops and business operating licenses but it's a well known fact in China (talk to some Longtop Financial and China Media Express investors) that they will never get access to cash or assets since the PRC legal system is opaque and anti-foreigner. Sad to say, but it's just a matter of time now until the public company goes bankrupt paying off a bunch of useless lawyers/advisors leaving all the US shareholders screwed.

 
CAST
0.01+0.0020(+25.00%)Dec 26 3:03 PMEST

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