BEIJING Oct 25 NQ Mobile Inc, the
Chinese mobile internet company labelled a "massive fraud" by
Muddy Waters Research Group, said on Friday it will "open the
kimono" in putting its accounts on display to rebut what it
described as false allegations.
Executives of New York-listed NQ said in an interview with
Reuters the company will hold an investor conference call before
U.S. markets open on Friday morning to respond to a report by
the U.S.-based short seller that said the "vast majority" of
NQ's reported China revenue was fraudulent.
"These are fully false allegations," said Henry Lin,
co-founder and co-chief executive of NQ.
Muddy Waters reports have previously unleashed scandals
involving other Chinese U.S.-listed companies, including
Sino-Forest Corp, Longtop Financial Technologies Ltd. and China
MediaExpress Holdings Inc. Its report on Thursday wiped more
than $500 million off NQ's market value, nearly half of its
"We know no better method than to just completely open up
the kimono and say, 'Here's our cash balances by account,'" Omar
Khan, NQ's co-chief executive, said in the interview in Beijing.
Khan said NQ management is dealing with the report as a
matter of urgency. "We will use all means necessary and
reasonable to protect our shareholders, our employees, our
company, and our investors."
On Thursday Muddy Waters initiated coverage of NQ Mobile,
saying that at least 72 percent of NQ's purported 2012 China
revenue from its security products is fictitious, coming from
Yidatong (YDT), a company that Muddy Waters alleged NQ controls.
"NQ's largest customer is really NQ," the report read. "Our
due diligence process included visiting 10 sites purportedly
occupied by YDT, all of which were empty or did not exist."
Over the last three years, NQ has raised $330.6 million from
stock and bond fund-raising. Earlier this month, it completed
the sale of US$172.5 million in convertible bonds. Morgan
Stanley and Deutsche Bank unit Deutsche Bank
Securities Inc purchased $22.5 million of that offer.
The company was founded in 2005 and listed on the New York
Stock Exchange in 2011 in an $89 million fundraising that was
underwritten by Piper Jaffray Companies, and raised an
additional $69 million in a secondary offering last year.
Morgan Stanley and Deutsche Bank declined to comment. Piper
Jaffray did not respond to an email request for comment.
(Details of the conference call are as follows:
NQ Mobile Inc. Conference Call to Address False Allegations
October 25, 2013, 8:30 AM Eastern Time
For the teleconference please call:
U.S. Toll Free: 1 866 519 4004
Hong Kong: 800930346
United Kingdom: 08082346646
Conference ID: 92639158)