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Xinyuan Real Estate Co., Ltd. Message Board

  • staccani staccani Aug 31, 2012 6:25 PM Flag

    Ongoing privatization

    Since most people gere do not seem to realize it (I agree these are not easy things to catch for someone not having a finance background), I would like to clarify one point here. The privatization process has already started and it is being done at very low cost without any cash. The company is buying back a total of USD 30M with its own cash, effectively increasing insiders' ownership at more than 50% at the expense of whover wants to sell. This is a very smart way to privatize without any additional cash at bargain prices and maybe they'll keep on with another wave of buybacks.
    The key questions is: will they buy also from the ones who do not want to sell and if so at what prices? I hope not, but let us see.

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    • raw data available in annual report (insider holdings) and current shares = each quarterly report -- toward the last page.

      Hmmmm and all others, hope it was a good weekend.

      GLTA this week...

    • It would be a couple years before that happend.

    • Cool. Yeah, fingers crossed on the US/Chinese agreement thing.

      Unfortunately, despite much optimism at the beginning of the current SEC/PRC Inspection Rights negotiations (which leads straight to the question of US shareholder rights in China), my go-to guy on all things Chinese accounting, Professor Gillis, has lowered his estimate of a happy outcome to 10%, with a 70% chance of the issue being kicked down the road, leaving a frighteningly high 20% chance of complete collapse.

      Well, nobody ever said China stocks were for the weak at heart.

    • thanks hmmmm very useful discussion tonight, I think the answer is cooperation betwen US and China. This should work both ways and if so also this Chinese companies listed in the US issues will be solved

    • Heh, we've got two threads with the same discussion on it. I think I just addressed your question, at least partially, on the other thread. If anything's left unanswered, then re-ask.

      PS: Yes, I am.

    • what about the criminal aspects, like a fraud for instance? Is there an extradition treaty for financial crimes between US and China. PS are you a lawyer?

    • Yes, and lawsuits would certainly be launched. That's what's happening right now in CMED/Y/Q's case.

      But what good would that do you? All of the companies above the PRC incorporated Operating Companies only exist in cyberspace, on some law firm's computers. They have no assets, no revenues and no cash. You'd win your suit, exactly as CMED's shareholders will win their suit, but so what? You'll have a judgment for cash that won't result in you receiving any actual money.

      The next step would be to apply to Chinese courts for enforcement of the US judgment against the Chinese Operating Companies (the ones that have real assets/revenues/cash), something PRC courts have so far been singularly unwilling to help with.

      And you can see their point, right? You'd be asking them to enforce a US judgment reached under US law against a Chinese citizen who wasn't represented at those proceedings for actions he took in China, while working for Chinese companies incorporated under Chinese law (the Operating Companies). Would US courts enforce a Chinese court's decision if all those facts were reversed? Possibly, but also very possibly not.

      At best, they'd probably say 'if you think there's a problem with a Chinese corporation incorporated under Chinese law with Chinese defendants, then your remedy is obvious: File suit under Chinese law in a Chinese court'. Anyway, that's what they've been doing so far.

    • Good point, Star. I should've thought of the Annual Report route for ownership numbers.

      Are they also included with every Q's reports (you mention numbers from the end of 1Q)?

    • Good thread. A couple things:

      1. Tracking Insider ownership of 20-F companies is way, way harder than it should be. I'm not sure why, but the standard way of tracking them (Through Form 4's) seems to break down for 20-F companies, or, at any rate, it breaks down for me.

      That said, I can only add my own best guess to the pile and say that I agree that the CEO's ownership is probably still the same amount of shares it was immediately after the IPO (whatever Acorisk said, 31M or whatever), constituting approximately 41%-ish.

      But that's only by imperfect, reverse reasoning: Since I can't find any Form 4's, which would've been required in the event of ownership % changes, therefore there haven't been any changes. But, again, I always have trouble w/ Form 4's.

      2. Acorisk, your numbers looked good to me (I don't sweat exactitude on stuff like that), but I think you did mention one thing I wonder about: If the CEO today owns 41%, and he did buy BR's 11 million remaining shares, that would give him, what, about 41 million-ish of the 72 million-ish, or well over 50%, wouldn't it?

      I think those rights of first refusal don't mean to imply the buyer would turn them into Treasury Shares, but even if that is the way they work, wouldn't that still leave the CEO with 31 mill out of approx 62 mill, or 50%?

      • 1 Reply to hmmm26
      • When it's all said and done -- Investor trust of the CEO and integrity of the CEO as it relates to the stockholders is the only real safeguard at the foundation of the Chinese stocks.

        That said, as visibility gets greater and greater and time passes for companies on NYSE, where consistent hsitory and external visibility kicks in - via audits, etc, it becomes less and less likely that fraud exists for the transparent organizations.

    • let me clarify. A scenario could be that the CEO reaches the majority, a Chinese fund linked somehow to the CEO place a bid at not so hign price, the CEO as majority owner accepts the offer, we are bound to accept as well. Then who knows what might be the backdoor agreements between the fund and the CEO; this ia illegal in US, but what abot in China? The CEO neverthelss seems a good trustable and reliable person and he has stated he does not want to take XIN private, so best thing we can do is trust him.

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