Often Partisan

BIHL’s relisting announcement – the implications

Having published yesterday a link to the announcement made by BIHL in connection with the demands made by the Hong Kong Stock Exchange prior to shares in BIHL being able to be relisted, I’ve had a few queries as to what it means. As I’m only a layman also with this sort of thing I’ve spent some time reading today as to the rules and I think I have some further answers which may help.

What does the announcement mean?

BIHL voluntarily suspended their own shares on the HKSE on 30 June 2011 after Carson’s arrest. This was done to protect the value of the shares whilst there was much uncertainty as to what was going to happen re Carson Yeung. Shares in BIHL have remained suspended since then, meaning that they cannot be traded on the Hong Kong Stock Exchange, and their price has thus been frozen at HK$0.154.

The announcement made to the HKSE yesterday outlined the conditions imposed by the HKSE before the shares can be relisted. In short, they are for the company to outline to the stock exchange the implications of Carson’s arrest with regards to the company, to confirm that Carson can remain in control of the company, to publish the outstanding accounts and address any Auditor’s concerns that may arise from those accounts and to confirm that adequate financial reporting procedures are in place.

To be concise, what the HKSE are saying is that they want to make sure any new investors in BIHL know the full details of the company before they’ll allow anyone to buy or sell shares in it; pretty simple stuff.

What can the HKSE do if these conditions aren’t met?

The HKSE have the power to suspend and delist shares that do not meet the listing rules of the Stock Exchange. It is in the best interests of the exchange for shares to not be suspended for overly long lengths of time; thus after six months of a company’s shares being suspended on the stock exchange they are entitled to demand a viable resumption of trading proposal from the company. Should there be no viable proposal received within six months, this can then be escalated to a final warning, and six months after that a company can be delisted. A company can also be delisted if they do not meet the main board listing rules of the HKSE. Fuller explanations can be found on this link.

The shares in BIHL have been suspended since 30 June 2011, and thus their first six months is almost up – hence they have contacted the HKSE with regards to relisting and the HKSE have imposed conditions. BIHL now have six months or so to meet those conditions or they are subject to the final escalation and potential delisting of the shares.

Furthermore, the accounts in BIHL have been delayed somewhat, and now contravene listing rules which state annual accounts should be issued no later than four months after the end of the financial reporting period. The financial reporting period ended on 30 June 2011, so as of 31 October 2011 the accounts are overdue, and BIHL are contravening listing rules by not issuing them.

What does delisting mean?

If the shares in BIHL are delisted from the HKSE, it means two things. Firstly, the company will not be able to raise money by issuing new shares in itself on the HKSE, and investors will not be able to make money by buying and selling of shares on the exchange. More importantly, it would mean investors would no longer enjoy the protection of the exchange in relation to their investment in the company and thus they would be much more open to liabilities in losing money. In short, it wouldn’t be good.

Thus the onus is on the investors of BIHL to ensure that the company can meet the requirements of the Stock Exchange for the shares to be relisted, lest they fall in danger of the company being delisted from the stock exchange. Chief amongst those requirements are issues regarding Carson’s position within the company and to a layman like myself it means logically the easiest way to remove those problems are to force Carson from the board. Equally, to a layman such as myself it would appear that it would make sense that the accounts be released and should there be any issues from the Auditors that they be addressed by the investors in the company.

In short – the HKSE cannot force Carson out from his position – nor should it want to interfere with the running of the company but the rules are set up to put the onus on the investors in the company to ensure that their company is being run properly. The current status quo cannot continue; something must change or BIHL are in big trouble.

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14 Responses to “BIHL’s relisting announcement – the implications”

  • daddyblue says:

    Confused Almajir as always but i thought in yesterdays post it was BIHL that requested the re-opening of the shares ????

  • Doug says:

    Another informative piece of journalism Aljimar, thank you.
    This all sounds like good news to me. The biggest causes of concern has been the uncertainty about the viability of BIHL and Carsons position within the company. It would appear that this move by the HKSE will remove any doubt or encourage investors to force change.
    At least within the six month period we may have a clear picture of what the future holds.

  • mickey07 says:

    So to make simple for people like me mayor “is someone trying to invest”….is this a green shoot????

    • almajir says:

      No Mickey, as the post said, the HKSE are trying to ensure the company is run properly and have put the onus on the investors of BIHL – ie the people who hold shares in it – to ensure that is the case.

  • BlueSteve says:

    Excellent post Almajir. I think for current investors to re-list appears to be the only course of action. If we are re-listed the share price will tumble which will open the way for new investment and a possible takeover…..

  • Masaccio says:

    On the LSE company shares are generally listed on the main stock exchange or on the AIM market. AIM market companies need to keep to the AIM Rule 26 regulations via their NOMAD (Nominated financial adviser) but main listed companies don’t have such regulations put upon them. I guess the HKSE might be similiar in that although companies may not be regulated by a Rule 26 they are still monitiored for any issues that might mean shares being suspended (delisted). I know a few companies on the main market that have been warned about how they behave and a couple that have been suspended from the AIM listings.

  • Garrybluenose says:

    Almajir, great blog!!!!
    Does this possible re-listing mean we can all buy shares, I reckon to buy at even the current price, a large group of fans could take control in this and maybe get bought out and make a profit………

  • chris says:

    medium term i think it will mean with the expected share price drop it may lead to new investment or a take over.
    But, in the short term because of the expected share price drop which could be dramatic, could it not force creditors (bank loans, business supliers etc) through lack of equity in the company to force administration because they are worried they may not get their money back as the worth of the company will have fallen.
    they may want administration rather than waiting for bankrupcy, both of which may not be on the cards, but more because of creditors fear / lack of confidence in BIH to turn it around.

  • ScudMuffin says:

    so basically the share freeze was done as a protection measure but BIHL could still get into trouble over it’s account disclosure.

  • JP Blue says:

    Almajir, I have been looking into the structure of BIHL and the implications this may have to our club and this website is very useful for fans that wish to read in more detail the current set up and position we are in here is the site http://www.irasia.com/listco/hk/birminghamint/

  • Dirty Bertie says:

    I’m not sure much has changed, except the pressure is building on Carson.
    BIHL may be buying more time by complying with the rules but, they have outstanding loans that will need repaying in the near future and the bank is being ultra cautious. They’re soon to publish dire accounts.
    Everyone’s getting real about the likelihood of a quick return to the premiership and Carson’s laundry will not be washed in public till late 2012. Until then – unless a few brown envelopes or an offer that can’t be refused works its magic – he is (almost literally) handcuffed. Also someone’s trying to claim his home, he needs cash flow.
    Time to face facts, re-list, sell a few shares, set up a new front man, withdraw into the background and hope.
    Carson is the football man out there. Hope he doesn’t end up in the Pearl river with a pair of 1950’s football boots on his feet. Better the devil…

  • Aussiebrum says:

    Having the company delisted from the Stock Exchange is most likely a great thing.

    Currently the listing rules prevent:

    a) The sale / purchase of shares AND
    b) The raising of capital through a rights issue

    And I don’t think the publicity associated with the BIHL dealings helps either the football club or the parent.

    So if the board are wanting to change the directors, deal in the Yeung Shareholding, raise capital and even restructure the company the best options might all involve a delisting.

    Private companies can raise capital and operate free of the restrictions imposed by the quarterly reporting obligations of a public company. And there are significant costs associated with being publicly listed.

    Football clubs shouldn’t be publicly traded, that was a 1980’s phenomena. That’s why most clubs that went public were subsequently delisted.

    Respectfully Almajar, I disagree that a delisting is a bad thing – I’ll argue it’s a very good result, where we will agree here is the fact the circumstances surrounding our delisting are terrible.

    • poppa999 says:

      Do we think other shareholders will move on and see it as a bad financial experience (if some already have done), or get Yeung out with the prospect of making it a saleable commodity?

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