October 3, 2011 / 9:40 PM / 6 years ago

ChinaCast to hire independent audit firm; stock halted

* Says independent audit firm to review cash balance

* Could cancel planned $50 mln share buyback program

* Shares fall 30 pct on Monday; halted after hours

Oct 3 (Reuters) - ChinaCast Education Corp hinted at not following up on its planned $50 million share buyback program and said it would hire an independent audit firm to review its cash balances.

The actual cost of the share buyback program would be $75 million due to a Chinese tax levied on distribution of profit in the United States, the Chinese education company’s Chief Executive Ron Chan said in a letter to shareholders.

Chinese regulatory authorities have also expressed “serious concerns over our intention of taking the full $50 million out of China” and the impact of this on the quality of education the company can provide, the CEO said in the letter posted on the company’s website.

ChinaCast will continue to monitor and assess the situation going forward, Chan said.

The company, which offers post-secondary education and e-learning courses, said it will engage an independent firm this week with forensic accounting and banking due diligence expertise to conduct an independent review of its cash balances.

Wunderlich Securities analyst Trace Urdan said ChinaCast has retained FTI Consulting to conduct a review independent of its auditor, Deloitte, to confirm the company’s cash balances.

ChinaCast’s stock closed down 30 percent on Monday on Nasdaq. The exchange halted trading of the stock after market close for additional information requested. (Reporting by A. Ananthalakshmi in Bangalore; Editing by Sriraj Kalluvila) (ananthalakshmi.as@thomsonreuters.com; within US +1 646 223 8780; outside U.S +91 80 4135 5800; Reuters Messaging: ananthalakshmi.as.reuters.com@reuters.net)

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