Harbin Electric (HRBN) Slammed Following Bearish Citron Report
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Harbin Electric (Nasdaq: HRBN) shares are getting absolutely slammed Thursday following another fraud report from Citron Research. The stock last traded at $6.64, down a jaw-dropping 53 percent.
In the note issued this morning, Citron argues a recent buyout offer from its Chairman and CEO Tianfu Yang is nothing more than a sham. The firm points to Yang's history of fraudulent loan guarantee documents.
With such a loan history, Citron questions how the exec would be able to obtain a $400 million loan to buyout the company.
Citron also notes some undisclosed liabilities, effectively making Harbin a potential money pit. Harbin's Chair obtained a $50 million bank loan following the original takeover announcement six months ago. From Citron: "Why? If you really have $55 million in the bank, earning less than 1% interest, would you borrow $50 million at 8% interest if you don’t desperately need the money?"
The firm next considers the market reaction to the buyout rumors: takeover arbitration normally brings the price of a stock close to the bid (click here for a good set of examples), yet Citron points out Harbin's share price hasn't come anywhere near the proposed offering.
Citron also doubts Harbin's equity partner, Abax Capital Management, on the deal, saying the firm doesn't have a real solid history either.
Here is the full report from Citron.
In the note issued this morning, Citron argues a recent buyout offer from its Chairman and CEO Tianfu Yang is nothing more than a sham. The firm points to Yang's history of fraudulent loan guarantee documents.
With such a loan history, Citron questions how the exec would be able to obtain a $400 million loan to buyout the company.
Citron also notes some undisclosed liabilities, effectively making Harbin a potential money pit. Harbin's Chair obtained a $50 million bank loan following the original takeover announcement six months ago. From Citron: "Why? If you really have $55 million in the bank, earning less than 1% interest, would you borrow $50 million at 8% interest if you don’t desperately need the money?"
The firm next considers the market reaction to the buyout rumors: takeover arbitration normally brings the price of a stock close to the bid (click here for a good set of examples), yet Citron points out Harbin's share price hasn't come anywhere near the proposed offering.
Citron also doubts Harbin's equity partner, Abax Capital Management, on the deal, saying the firm doesn't have a real solid history either.
Here is the full report from Citron.
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