The domestic re-listing of Chinese online gaming operator Shanda Games Ltd. has stalled after Shenzhen-listed shell company Ningxia Zhongyincashmere International Group was sued by investors for overselling Shanda shares and improperly reducing their stakes, according to public filings (in Chinese).
At least seven investors, including Shanghai Haode Asset Management and Ningxia Xiaoguang Equity Investment Partners, said in multiple lawsuits that their shareholdings have been improperly adjusted by Zhongyincashmere.
They have subscribed to RMB2.15 billion worth of Shanda shares in total in the privatization deal. Their shareholding has been reduced to RMB478 million combined after the adjustment.
Zhongyincashmere tried to transfer Shanda’s assets to its offshore affiliates via a complicated merger deal today, but the attempt was stopped by an emergency injunction from the High Court of the Hong Kong Special Administrative Region.
In November, the investor consortium led by Zhongyincashmere, which also included Orient Securities and Haitong Securities among others, took the NASDAQ-listed Shanda private in a transaction that valued the gaming firm at US$1.9 billion.
The original plan after the privatization was for Zhongyincashmere to acquire Shanda, therefore completing a re-listing of the company in a domestic stock exchange.
The lawsuits will be heard in the next few months, and the re-listing will be pending on the judgements of the lawsuits.