The Taipei District Court on Friday approved prosecutors’ request to detain Aaron Hsu (???), chairman of gaming software developer XPEC Entertainment Inc. (????), for his alleged involvement in a botched tender offer of a stake in the company by a Japanese suitor, which caused massive losses for investors.
The court, which had turned down three previous requests by prosecutors, reversed its decision after prosecutors presented new evidence demonstrating the necessity to detain Hsu.
No details about the new evidence are available as a case still under investigation is supposed to be kept under wraps.
The case, which was exposed in August, was the first settlement default in a tender offer in Taiwan’s equity market, which caught many investors and market analysts off guard.
In late May, Bai Chi Gan Tou Digital Entertainment Co (????) announced it would acquire 38 million XPEC shares or 25.17 percent of the company at NT$128 (US$4.08) per share, an almost 22 percent premium over XPEC’s share price then, saying the Japanese firm was upbeat about the Taiwanese firm’s prospects. The acquisition at that time had been valued at NT$4.86 billion.
The tender offer announcement prompted many retail investors to pick up XPEC shares on expectations that Bai Chi Gan Tou would spend NT$128 per share to buy their XPEC holdings later.
In June, the company’s share price surpassed NT$110.
However, speculation emerged on Aug. 19 that Bai Chi Gan Tou would delay the acquisition, which started to push XPEC shares lower.
In late August, the Japanese firm requested an extension of the deadline for making a payment on the acquisition. On Aug. 30, however, it announced it had decided to walk away from the deal, resulting in a settlement default.
The default led the company’s shares to drop to as low as NT$70.20 on the over-the-counter market on Aug. 31.
As many investors sold their shares, those who purchased the stock after the tender offer was first announced suffered significant losses. The failed acquisition resulted in a loss of NT$10 billion in XPEC’s market capitalization.
Source: Focus Taiwan News Channel