SHANGHAI The sale of China Metal Recycling (Holdings) Ltd. (CMR) shares by chairman and chief executive officer Jacky Chun to a Chinese state-owned group is still planned, even as trading of the scrap companys shares remains suspended.
The Hong Kong-based company, which is disputing allegations from a U.S.-based investment research group, said the sale to China Energy Conservation and Environmental Protection Group was still "under way."
Under the terms of the deal, Chun agreed to sell 56 percent of his shares in CMR, representing 29 percent of the company, for Hong Kong $3.51 billion ($452.5 million).
The sale agreement, filed Jan. 25 with Hong Kong Exchanges & Clearing Ltd., suggested that the deal could lapse in the case of a prolonged share suspension. "Completion is conditional upon, among other things ... there being no suspension of trading of the shares on the stock exchange for more than 20 consecutive business days from the date of the sale and purchase agreement, other than any suspension arising as a result of the sale and purchase agreement," the filing said.
Trading was suspended Jan. 28 at the companys request.
CMR says it is the biggest scrap company in China, but this claim was challenged by Glaucus Research Group California LLC in a 38-page report released Jan. 27 questioning the size and scope of CMRs business (amm.com, Jan. 31).
The report, which said that Chinese import data and other official information cast doubt on CMRs claims for the scale of its business, contained a "strong sell" recommendation. Glaucus, a California-based investment research group, said it had shorted CMR shares in advance of publishing its claims and stood to gain from declines in the scrap companys share price.
The company again rejected Glaucus allegations Feb. 28, but said it was still preparing a detailed rebuttal. "CMR considers (the allegations) to be completely inaccurate and wholly unfounded. CMR is now preparing a clarification announcement," it said.
A version of this article was first published by AMM sister publication Metal Bulletin.