Re: the misleading priliminary proxy: Have you or others "officially" pointed this out to the SEC so that they could not say that they didn't know about this? My opinion is that the SEC does what gets them, and the President, the most and best PR ......... period. This buyout is fraudulent, pure and simple, BUT is there any good PR to come from the SEC investigating it?
My calculations show that Prescott's current cost average is "about" $0.53 per share. On 8/6/13 they owned 3,412,398 shares at "about" $0.75/s (judging from the prices leading up to that date). If that starting point is roughly accurate, then, with their new purchases, they should be at "about" $0.53/s overall average cost.
Excellent question, and the one we all should be concentrating on, because the answer will determine whether we will make any money or not. Here are my thoughts:
First of all, it depends on whether Prescott has an "understanding" with the company or not.
If yes, then Prescott is planning to be the key non-insider whose vote will guarantee (if the buyout price is to Prescott's liking) a successful going-private deal for the Insiders...Prescott now holds the key to a successful buyout (along with Jayhawk -- let's not forget them). There may be something additional in it for Prescott for providing this service -- I don't know.
If no, then I'm somewhat at a loss as to why Prescott is buying so many shares unless 1) they are simply going to wait until the shares are eventually listed on the Hong Kong Exchange at a predictably higher price, or 2) Prescott is somehow or other planning to hold out their shares for ranson of some sort or other.
Anyway, this is the key question in my mind. Additional speculation is solicited.
Settle down. I don't know about the others but I know who I am, and I am just a retired guy in Maryland with 20,000 shares at $0.43/s.
You know, I like to use this board to learn, express my ideas, get the ideas of others, etc. I don't like personal attacks which are obviously pointless AND discourage people like me from using this board.
OK, well I'll speculate myself then.
The 3 original members of the Equity Committee (EC) were not getting the job done. They did not get anyone to submit a bid on the Chinese assets which will then wind up being sold to the Stocking Horse (SH) at less than a fair price (which shouldn't be controversial since all SH bids are somewhat less than a fair price.) Getting additional bidders would seem to be a major goal of an EC, right? Also, the EC was not keeping their legal counsel's billings in check -- like what has the guy really accomplished anyway? Finally, it may be that the US Trustee (UST) is looking forward to the day when it would like to see the company's executives investigated, and maybe (I don't know enought about the legalities here) the EC would be instrumental in getting that started.
Notice that the UST appointed 4 additional members to the EC -- 4 is enough to outvote the 3 original members.
Hey, I'm just trying to explain why the UST made additional appointments to the EC. You know it wasn't done just to give these guys some EC experience so they could put it in their resumes -- it was done for very specific reasons. It's just a question of what these reasons were.
Per latest docket filing, there were no additional bidders for the Chinese assets, so the sale will go to the Stocking Horse. This would seem to be a very bad outcome for the Equity Security Holders. It also makes you wonder what good came of appointing a Committee of Equity Security Holders, and paying for the legal costs out of our now very-small pocketbook.
go to SEC dot GOV then click on FILINGS then click on SEARCH FOR COMPANY FILINGS then enter YONG in the right-hand box and then click SEARCH
Thanks for the Hong Kong listing requirements -- didn't know that. Well, then I have to wonder what Prescott Group is thinking unless they are pretty sure what is really going to happen is a going-private plan rather than a going-dark plan, in which case they will be in a commanding position since they will shortly own over 50% of the non-insider shares (non-excluded shares). I think Prescott is in cahoots with the company and Prescott is therefore purposely buying enough shares to be able to guarantee to the company that a going-private offer will succeed. In return, and to aid Prescott in that effort, the company announced a going-dark plan simply for the purpose of lowering the trading price significantly so Prescott's purchases would be at a low-enough price for them to make a good profit. This would mean that the company will, at some point, cancel the going-dark filings and replace them with going-private filings.
The company said that they will delist from the NYSE, after which they may or may not trade on the pink sheets. BUT they also said that they will then deregister their stock after which it can not be traded by any broker in this country. If their plan goes through, it won't be long until you will be stuck with the stock if you haven't sold it already. I'm hoping that they will at some point list the stock on the Hong Kong exchange, which could be several years from now, at which point it can be traded again.
To me, it's like asking if you should place your bet on the red or the black. There are only two people that know what the plan is, Liu and Prescott Group -- we're not in on it. I think that Liu would be better off with a going-private deal, BUT he has already said that he is going to delist the stock, so ??????? I think that they will go delist as stated and show up sometime in Hong Kong BUT it is a toss-up as far as I can tell. I say this because I think that changing their mind and recinding their stated intention of delisting, and then stating that they will be going private instead, would really cause the SEC to get involved.
The company said in its 8K filing that it expected that the stock would no longer trade after Nov. 11th.
mizesaw, yes, I think I am coming around to your way of thinking. Now you may not agree with my analysis, but here goes:
Probably once Liu saw Prescott's initial form 3 filing and saw they were still purchasing more, Liu contacted Prescott (or vice versa) and proposed that 1) if Liu got the price down to 20 cents or so (which he would do via the delisting thing), and 2) if Prescott would then buy enough more shares to have over 50% of the non-insider shares and get his cost down to 50 cents or so, and 3) if Prescott would agree to vote FOR a going-private buyout (the success of which would then be guaranteed), then Liu would do the delisting thing and later cancel it in favor of a buyout at around $1.00 or so.
Of course, it could be that Liu (probably with Prescott's cooperation or even instigation, but not a certainty) really does intend to get out of the USA and, presumably, relist the stock in Hong Kong (where it would trade at a much higher multiple, of course).
It seems to me that the buyout route would get Prescott a quick 100% gain whereas the Hong Kong route would get them a much greater gain but would take a much longer time. If I was convinced it was going the buyout route, I would buy a lot more stock on Monday, but I wouldn't buy more if I thought it would go the Hong Kong route, simply because of the greatly-extended time frame and the difficulty of selling a Hong Kong stock when the time came.
mizesaw, thanks for the reply. Here is another possibility, and I would be interested what you think of it. Perhaps as a result of Prescott's initial form 3 filing back in early August, Liu got concerned that Prescott would continue to acquire more shares and soon be in a position to negate a possible attempt by Liu to "take the company private" at a very cheap price. To blunt this possibility, Liu is simply going to avoid a shareholder vote altogether by delisting the stock from the NYSE and deregistering it with the SEC to prevent further trading. With no further public reporting required, Liu would then just control the company out of China as if it were a private company. He could pay himself whatever he wanted, sell off various parts of the company to whomever he wanted until all of the various parts of the company were then in other hands, leaving shareholders with nothing more than ownership of nothing. Believe me, I certainly don't want this to happed, but I have been programed over the years to believe the worst in people, especially Chinese business people.
By the way, it appears that Prescott Group now owns about 18% of the company which is about 43% of the non-insider holdings -- that's a lot! If they acquire approximately another 874,000 shares, then they will control half of all the non-insider shares! This should be interesting to watch.
Well, you are right -- they are averaging down. I calculate from their SEC filings that the average cost of their current stake of 5,463,899 shares is about $0.596 per share (which assumes their original stake of 3,412,398 shares cost them about $0.75 per share). I guess we'll just have to wait and see what they are up to.
They couldn't have been "in on this" or they would have postponed their recent buying spree until after the "announcement." So that means that they were conned just like the rest of us, right? Now if you owned about 15% or so of the company and were just conned into a major loss, what would you do?