SHANGHAI May 24 China Auto Rental has formally
withdrawn its application to hold an initial public offering in
the United States, marking an end to the first attempt by a
Chinese firm to list in New York since U.S. regulators tightened
rules for foreign applicants.
The company, which postponed a planned NASDAQ listing on
April 24 citing "poor market conditions," disclosed its decision
in a filing with the U.S. Securities and Exchange Commission
It originally hoped to raise around $158.1 million to pay
off debt and expand its fleet, before reducing the targeted sum
to $138 million.
Yao Junhong, executive vice president of China Auto Rental,
was quoted in Chinese business magazine Caixin saying the
environment for Chinese stocks in the United States was not good
at present, and he feared a weak IPO would damage the company's
future ability to raise funds.
China Auto Rental, which says it owns 26,000 rental cars in
China, could not be reached for comment at time of reporting.
The company is backed by Legend Holdings, parent of
China-based private equity fund Hony Capital, and the owner of
computer maker Lenovo among other businesses.
U.S-listed Chinese stocks saw their reputations tarnished
over the last two years as dozens of Chinese companies listed in
North America were accused of accounting irregularities or
Many prominent Chinese companies were forced to delist,
including Longtop Financial Technologies, which saw over $1
billion worth of market capitalization wiped off the boards when
it was forced to leave the New York Stock Exchange in August
2011 after its auditor Deloitte resigned, complaining of
managerial misconduct during the course of the audit.
Sino-Forest Corp, along with some of its executives, was
charged with fraud by Canadian regulators on Tuesday after being
delisted from the Toronto Stock Exchange earlier this month.
U.S. and Chinese regulators continue to negotiate over how
Chinese firms that propose to list in the United States are to
be audited. A standout issue is the refusal of Deloitte's China
subsidiary to release documents related to Longtop Financial to
the SEC, citing state secrecy laws. Longtop claimed its primary
clients were China's "Big Four" state-owned banks.
However, the main U.S. auditor watchdog told Reuters in
early May that the U.S. Public Company Accounting Oversight
Board (PCAOB) is close to an agreement that will allow it to
observe audit inspections in China.
Jim Doty, chairman of the PCAOB, said the current proposal
on the table is that U.S. inspectors be allowed to observe
Chinese authorities when they inspect audits that are done in
China of U.S.-listed companies.
But he added: "one can never guarantee the outcome of this."