US-based fund says uncertainties around firm will clear
By LYNETTE KHOO 18 December 2008
Bio-Treat Technology’s largest shareholder, Shah Capital Management, said that it is not selling its stake despite the troubles facing the China-based water-treatment company.
The US-based fund, which focuses on Greater China, expects the uncertainties surrounding Bio-Treat to clear up once its defaults on convertible bonds (CBs) and a loan are settled amicably.
‘We are not selling our shares. We think this issue can be solved amicably,’ said Himanshu Shah, president and chief investment officer of the US-based fund that focuses on Greater China.
Shah Capital has been shoring up its stake in Bio-Treat and now holds a 13.78 per cent stake. It became the largest shareholder in Bio-Treat after Precious Wise Group disposed of its 29.79 per cent stake in Bio-Treat on Nov 12.
Another European fund KBC Asset Management owns a 5.73 per cent stake in Bio-Treat as at Oct 24, according to a SGX filing, but it could not be reached for comment.
Bio-Treat disclosed last week that its entire assets have now been pledged in favour of Precious Wise - following the lender’s serving of a notice of default relating to a HK$360 million (S$67 million) loan facility.
Default on the loan was triggered by a default in its CB programme. Bio-Treat had in April received notices of default from some CB holders who had exercised put options on Jan 18 under a $206 million CB programme due in 2013.
‘The key I think is that the company puts this behind and resolve this matter with the CB holders, which I think is doable,’ Mr. Shah said. He believes legal action is not a viable option for the CB holders as it would take a long time and they may not be able to recover all their investments.
‘My take is that Bio-Treat does need to sell some of its assets but at a right price and restructure the deal with the CB bondholders so that it has the breathing room before the credit markets return to normalcy in the next six to 12 months or so,’ he said.
But poor market sentiment could hinder getting a good price for its wastewater treatment plants, Mr. Shah added. Bio-Treat has seven completed build-operate-transfer/transfer-operate-transfer (BOT/TOT) projects running at 550,000 tonnes per day and eight more projects are slated to be completed in 2009.
Mr. Shah said that he remains bullish about Bio-Treat’s fundamentals as the industry is expected to see double-digit growth and benefit from China’s stimulus package.
Bio-Treat incurred a net loss of 413.89 million yuan (S$87.4 million) for the year ended June 30 against a net profit of 330.35 million yuan a year ago. As at June 30, it was in net current liabilities of 408.26 million yuan - a huge swing from its earlier net current assets of 1.81 billion yuan a year earlier.
Its external auditors, Moore Stephens LLP, made a disclaimer of opinion for Bio-Treat’s FY08 financial statement, saying that it was unable to form a view on the use of the going concern assumption in the preparation of the financial statements.
Yesterday, Bio-Treat continued a second-day slide, closing 8.3 per cent lower at 5.5 cents after a hefty volume of 15.76 million shares changed hands.
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Shah Capital not selling Bio-Treat stake
US-based fund says uncertainties around firm will clear
By LYNETTE KHOO
18 December 2008
Bio-Treat Technology’s largest shareholder, Shah Capital Management, said that it is not selling its stake despite the troubles facing the China-based water-treatment company.
The US-based fund, which focuses on Greater China, expects the uncertainties surrounding Bio-Treat to clear up once its defaults on convertible bonds (CBs) and a loan are settled amicably.
‘We are not selling our shares. We think this issue can be solved amicably,’ said Himanshu Shah, president and chief investment officer of the US-based fund that focuses on Greater China.
Shah Capital has been shoring up its stake in Bio-Treat and now holds a 13.78 per cent stake. It became the largest shareholder in Bio-Treat after Precious Wise Group disposed of its 29.79 per cent stake in Bio-Treat on Nov 12.
Another European fund KBC Asset Management owns a 5.73 per cent stake in Bio-Treat as at Oct 24, according to a SGX filing, but it could not be reached for comment.
Bio-Treat disclosed last week that its entire assets have now been pledged in favour of Precious Wise - following the lender’s serving of a notice of default relating to a HK$360 million (S$67 million) loan facility.
Default on the loan was triggered by a default in its CB programme. Bio-Treat had in April received notices of default from some CB holders who had exercised put options on Jan 18 under a $206 million CB programme due in 2013.
‘The key I think is that the company puts this behind and resolve this matter with the CB holders, which I think is doable,’ Mr. Shah said. He believes legal action is not a viable option for the CB holders as it would take a long time and they may not be able to recover all their investments.
‘My take is that Bio-Treat does need to sell some of its assets but at a right price and restructure the deal with the CB bondholders so that it has the breathing room before the credit markets return to normalcy in the next six to 12 months or so,’ he said.
But poor market sentiment could hinder getting a good price for its wastewater treatment plants, Mr. Shah added. Bio-Treat has seven completed build-operate-transfer/transfer-operate-transfer (BOT/TOT) projects running at 550,000 tonnes per day and eight more projects are slated to be completed in 2009.
Mr. Shah said that he remains bullish about Bio-Treat’s fundamentals as the industry is expected to see double-digit growth and benefit from China’s stimulus package.
Bio-Treat incurred a net loss of 413.89 million yuan (S$87.4 million) for the year ended June 30 against a net profit of 330.35 million yuan a year ago. As at June 30, it was in net current liabilities of 408.26 million yuan - a huge swing from its earlier net current assets of 1.81 billion yuan a year earlier.
Its external auditors, Moore Stephens LLP, made a disclaimer of opinion for Bio-Treat’s FY08 financial statement, saying that it was unable to form a view on the use of the going concern assumption in the preparation of the financial statements.
Yesterday, Bio-Treat continued a second-day slide, closing 8.3 per cent lower at 5.5 cents after a hefty volume of 15.76 million shares changed hands.
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