* IPO prices at $29 vs $28-$30 range -underwriter
* Sells 6 mln ADS, raises $174 mln -underwriter
* To trade on Nasdaq under symbol "TUDO"
(Adds details on Tudou's internal controls)
By Clare Baldwin
NEW YORK, Aug 16 Chinese online video company
Tudou Holdings Ltd priced shares in its initial public offering
within the expected range on Tuesday, even though investor
sentiment toward U.S.-listed Chinese stocks and a market rout
had suggested it would be difficult.
Investor appetite for U.S.-listed Chinese stocks has proven
touchy after a series of accounting scandals, and 10 of the 12
IPOs scheduled for last week were pulled as concerns about the
U.S. economy and the European debt crisis created a volatile
trading environment.[ID:nL3E7IL0BK] [ID:nN1E77B1QZ]
Still, Tudou and its owners sold 6 million American
Depositary Shares for $29 each, raising $174 million. They had
planned to sell ADS for $28 to $30 each.
Much like Google Inc's (GOOG.O) YouTube, Tudou allows users
to watch, upload, rate, comment on and recommend videos. It is
the second-largest online video company in China and makes
money primarily by selling ads but also sells mobile access to
its site to China Mobile (0941.HK) and China Unicom customers.
It had planned to go public last year, but the plan stalled
due to a lawsuit by the former wife of founder, Chairman and
Chief Executive Gary Wang.
Tudou's revenue has risen sharply in recent years, but the
company's losses have also widened. In the most recent
reporting period, the three months ended March 31, the
company's net revenue rose 167 percent to 79.4 million yuan, or
$12.1 million. Its net loss attributable to ordinary
shareholders widened 795 percent to 340.7 million yuan, or $52
million, in the same period.
Tudou, whose main business operations are in China but
which is registered as a Cayman Islands holding company, said
in its regulatory filings it expects to have enough operating
cash flow to continue as a going concern and to be able to
raise funds for capital commitments and working capital by
issuing redeemable convertible preferred shares or taking
Tudou in the risk factors section of its prospectus,
however, said it had found a "material weakness and a
significant deficiency" in its internal financial controls.
The company said it does not have enough people with
knowledge of U.S. accounting rules, which is not uncommon for
Chinese companies. It also said its lack of internal controls
had resulted in errors in recording and accounting for
redeemable convertible preferred shares, share-based
compensation, litigation losses, advertising agency fees, and
certain other balance sheet line items.
Tudou, whose name means "potato" in Mandarin and conjures
images of an Internet couch potato, said it plans to use its
share of the IPO proceeds for content, Internet bandwidth, and
working capital and general purposes.
CEO Wang is selling a small portion of the shares he
controls in the IPO. Other, non-selling shareholders include
funds affiliated with Singaporean sovereign wealth fund
Credit Suisse, Deutsche Bank Securities and Oppenheimer &
Co were the underwriters on the Tudou IPO. The shares are
expected to begin trading on the Nasdaq on Wednesday under the
Shares of rival Youku.com YOKU.N, which went public in
December, have risen nearly 87 percent since their IPO. Youku
and Baidu Inc (BIDU.O) were interested in buying Tudou
according to Chinese media reports last week but a source close
to the situation denied the reports.[ID:nL3E7JF0HE]
(Reporting by Clare Baldwin; Editing by Gary Hill and Matthew