Ultrasonic says top executives and cash missing

[CityFarmer]

S-Chip equivalences are also exist in other exchanges as well...

Ultrasonic says top executives and cash missing

FRANKFURT - Ultrasonic AG, a Chinese footware maker listed in Germany, said most of its cash reserves in China and Hong Kong have disappeared, adding it has also lost trace of its chief executive and chief operating officer.

"Most of the company's cash funds at PRC (People's Republic of China) and Hong Kong levels have been transferred being no longer in the company's range of influence," Ultrasonic said in a statement on Tuesday.

Shares in Ultrasonic were down 79 percent at 1418 GMT (10.18 a.m. EDT).

The group's finance chief has informed the supervisory board that he has been unable to reach both CEO Qingyong Wu and COO Minghong Wu since the weekend, Ultrasonic added.

The group said its German holding company still has a "relevant six-figure amount" at hand to meet its payment obligations.

Finance chief Kwong Clifford Chan and the supervisory board are in talks with authorities and business partners, trying to gather further information to clarify the situation, according to the statement.

Another Germany-listed Chinese manufacturer, Youbisheng Green Paper, earlier this year also said its CEO had been absent with no explanation. It later initiated insolvency proceedings. REUTERS
http://www.todayonline.com/business/ultr...sh-missing

[wahkao]

another eratrat lifestyle in the making?
eratrat lifestyle also do foot wear

[CityFarmer]

Factory visits are helpful, but we shouldn't put too much weight on it. Unsecured offshore lending is a very high risk venture. IIRC, those offshore lendings from Singapore bank to China, are secured.

Unsecured Nomura-backed loan, missing CEO add red flags to China lending
19 Sep 2014 06:51
[SINGAPORE] Nomura Holdings Inc and co-lenders spent nine months poring over the books, sizing up management and even checking out the factory floor at China's Ultrasonic AG before deciding in August to give the Frankfurt-listed shoemaker a US$60 million unsecured credit facility.

The loan was unsecured in keeping with regulations in China at the time it was structured. Nomura, a Japanese bank, and its partner banks, however, felt they had done their homework.

But within weeks, the 3-year loan had been drawn down in full and two of Ultrasonic's top executives had disappeared - leaving the lenders in a situation that should ring alarm bells for foreign bankers exposed to China. "You couldn't get onshore security for offshore loans," said a person involved in the loan negotiations. "It was a common risk in offshore borrowing for Chinese companies." The affair is a reminder for offshore banks of the risk of lending to small and mid-sized Chinese firms which have long struggled to access credit. Local banks are more inclined to lend to larger, more established companies as economic growth slows, forcing smaller firms to seek expensive loans in the less-regulated shadow banking industry or from offshore lenders.
...
Source: Business Times Breaking News

[weijian]

Factory visits are helpful, but we shouldn't put too much weight on it. Unsecured offshore lending is a very high risk venture. IIRC, those offshore lendings from Singapore bank to China, are secured.

It seems like previously, SAFE approval is required to secure asset collateral for offshore lending, but it was subsequently relaxed in Jun2014.

Link: http://www.financeasia.com/News/388735,c...nders.aspx

Before the disappearance, the CEO owned ~50% of the company (market cap~90mil euros) and it seems like he decided to cash out his stake earlier by absconding with the 60mil loan. Could he had been in an liquidity crisis himself?

http://www.reuters.com/article/2014/09/1...MM20140918

"People have backgrounds which are shady, then you do a lot more thinking about it," said the first person involved in the talks. "In this case, the gentleman had no such background, and was quite well endorsed by prominent figures in the region, so he surprised all the banks and investors that bought shares."

From what i have read, it seems like the company itself might have been legit but the character of Mgt was the question mark. All the site visits, customer talks and background checks would not have effectively indicate the latter. Sometimes, i wonder whether is dishonesty already a deeply embedded practice into the Chinese culture?

All in all, the company was listed in Sept2011 and took ~3years to blow up. Based on S-chip experience, it is within the 3-5years timeframe for such shenigans to reveal their "true colors"...

[CityFarmer]

It seems like previously, SAFE approval is required to secure asset collateral for offshore lending, but it was subsequently relaxed in Jun2014.

Link: http://www.financeasia.com/News/388735,c...nders.aspx

"You couldn't get onshore security for offshore loans", as stated in the article, is an incorrect statement. It was time consuming to get it approved, and it is not an issue nowadays, base on observation on offshore borrowings.

[ValueBeliever]

A system designed by CHINA government to permit entry of good money to become bad.

In a way the world is increasing growing tired of the CHINA government. All the more reason to isolate China Chinese.

That money will become part of China's government money in return because it will be in circulation inside China economy.

[Edited by moderator]

[CityFarmer]

A system designed by CHINA government to permit entry of good money to become bad.

In a way the world is increasing growing tired of the CHINA government. All the more reason to isolate China Chinese.

That money will become part of China's government money in return because it will be in circulation inside China economy.

[Edited by moderator]

Well, China is a closed system is undeniable, but we need to aware that the rules are well-known, before the FDI flow-in.

Corruption base on the above is unfounded, thus the statement is removed. Please take note.

Regards
Moderator

[specuvestor]

It seems like previously, SAFE approval is required to secure asset collateral for offshore lending, but it was subsequently relaxed in Jun2014.

Link: http://www.financeasia.com/News/388735,c...nders.aspx

"You couldn't get onshore security for offshore loans", as stated in the article, is an incorrect statement. It was time consuming to get it approved, and it is not an issue nowadays, base on observation on offshore borrowings.

Technically onshore security can be sought but I have yet to heard non locals able to seize local assets in China. That's probably why offshore banks still would want offshore collateral vs say Singapore.

Therein lies the primary problem of S-chips and such. Non-local shareholders' claim are on the onshore assets.

[Behappyalways]

you believe?

SHOE COMPANY: Our Ex-CEO Who Disappeared With All Our Money Called Us Over The Weekend, And Said He's Coming Back
http://finance.yahoo.com/news/shoe-compa...19479.html

[mohican]

I was watching an interview with the founder on Bloomberg TV where he went on to explain that he had merely "borrowed the money" and had every intention to return the money to the company and then had the cheek to say that the damage to his reputation and to the company is not something that can be measured in $ terms. Just shows the blatant disregard that some of these businessmen have for corporate governance.