RENN pricing $13.5 Please comment# Stock
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Renren has replaced the head of its audit committee on the eve of its
initial public offering on the New York Stock Exchange, as the Chinese
social networking group seeks to protect itself from the fall-out of an
accounting controversy at another company.
The offering of Renren, which has nothing to do with the other company’s
accounting problems, is set to raise as much as $743m and has seen unusually
strong demand from investors.
The company’s expected pricing of its IPO on Tuesday night was delayed due
to difficulties including an unusually large book of potential investors,
according to a person close to the deal. This person said the IPO would be
priced on Wednesday morning.
Earlier this week, Renren said that Derek Palaschuk, chief financial officer
of Longtop, a Chinese Nasdaq-listed specialist software company, no longer
heads Renren’s audit committee and is also no longer an independent
director appointee, according to an amendment to Renren’s prospectus filed
to the US Securities and Exchange Commission on Monday.
The step follows an accounting controversy at Longtop that sent the company
’s shares plummeting last week.
Mr Palaschuk said he resigned on April 30 to “protect Renren”.
“I told Joe [Chen, Renren’s chief executive] even though all of the
allegations [about accounting fraud at Longtop] are without substance, it is
definitely better for [Renren] that I resign from the board with immediate
effect so that there is no unwarranted attention brought to Renren,” he
said.
At Renren, David Chao, an independent director representing one of Renren’s
minority shareholders, has replaced Mr Palaschuk.
Initial public offerings
FT In depth: News, comment and analysis on flotations
Renren has criticism after it restated last week figures on user growth in
the first quarter and has faced questions from investors about the way it
calculated the company’s valuation ahead of its listing.
Meanwhile, Nasdaq OMX on Monday proposed to introduce stricter requirements
for groups seeking to list via reverse mergers – an avenue not being used
by Renren but common among Chinese companies last year.
The exchange plans to require that a company created through the merger of a
private operating group with a publicly listed shell can only list on
Nasdaq after having traded over-the-counter or on another exchange for at
least six months. The bid price also must have been maintained above $4 a
share for at least half of the 60 trading days before the planned IPO.
The planned regulatory changes come in response to a series of investor
class action suits launched last year against Chinese companies listed in
the US. Some had filed revenue data to the SEC dramatically different from
that on file with the Chinese government. Some accounting experts say the
differences are due to the fact that Chinese tax authorities require filings
from local operational companies while the SEC receives consolidated
figures filed by a holding company.
As reverse mergers offer unlisted companies a ‘shortcut’ to the market,
Nasdaq’s proposal aims at introducing a period during which potential
accounting problems could come to light.
Additional reporting by Telis Demos in New York
initial public offering on the New York Stock Exchange, as the Chinese
social networking group seeks to protect itself from the fall-out of an
accounting controversy at another company.
The offering of Renren, which has nothing to do with the other company’s
accounting problems, is set to raise as much as $743m and has seen unusually
strong demand from investors.
The company’s expected pricing of its IPO on Tuesday night was delayed due
to difficulties including an unusually large book of potential investors,
according to a person close to the deal. This person said the IPO would be
priced on Wednesday morning.
Earlier this week, Renren said that Derek Palaschuk, chief financial officer
of Longtop, a Chinese Nasdaq-listed specialist software company, no longer
heads Renren’s audit committee and is also no longer an independent
director appointee, according to an amendment to Renren’s prospectus filed
to the US Securities and Exchange Commission on Monday.
The step follows an accounting controversy at Longtop that sent the company
’s shares plummeting last week.
Mr Palaschuk said he resigned on April 30 to “protect Renren”.
“I told Joe [Chen, Renren’s chief executive] even though all of the
allegations [about accounting fraud at Longtop] are without substance, it is
definitely better for [Renren] that I resign from the board with immediate
effect so that there is no unwarranted attention brought to Renren,” he
said.
At Renren, David Chao, an independent director representing one of Renren’s
minority shareholders, has replaced Mr Palaschuk.
Initial public offerings
FT In depth: News, comment and analysis on flotations
Renren has criticism after it restated last week figures on user growth in
the first quarter and has faced questions from investors about the way it
calculated the company’s valuation ahead of its listing.
Meanwhile, Nasdaq OMX on Monday proposed to introduce stricter requirements
for groups seeking to list via reverse mergers – an avenue not being used
by Renren but common among Chinese companies last year.
The exchange plans to require that a company created through the merger of a
private operating group with a publicly listed shell can only list on
Nasdaq after having traded over-the-counter or on another exchange for at
least six months. The bid price also must have been maintained above $4 a
share for at least half of the 60 trading days before the planned IPO.
The planned regulatory changes come in response to a series of investor
class action suits launched last year against Chinese companies listed in
the US. Some had filed revenue data to the SEC dramatically different from
that on file with the Chinese government. Some accounting experts say the
differences are due to the fact that Chinese tax authorities require filings
from local operational companies while the SEC receives consolidated
figures filed by a holding company.
As reverse mergers offer unlisted companies a ‘shortcut’ to the market,
Nasdaq’s proposal aims at introducing a period during which potential
accounting problems could come to light.
Additional reporting by Telis Demos in New York
