XPEC announces share buyback after botched tender offer

XPEC Entertainment Inc. (????), a gaming software developer in Taiwan, has launched a share buyback program in a bid to restore investors' confidence in the company after a tender offer proposed by a Japanese firm fell apart.

Under the program, XPEC will start to buy back its own shares from the open market at a price range of NT$45 (US$1.42) to NT$130 during the period between Sept. 5 and Nov. 4. The share buyback aims to purchase up to 6.25 million XPEC shares from the market.

The share buyback program came after XPEC shares suffered a 10-percent plunge, the maximum daily decline, for the third consecutive session on Friday, when the stock closed at NT$56.90, the lowest level in 46 months for the company.

XPEC shares had encountered heavy selling since Wednesday after Japan-based Bai Chi Gan Tou Digital Entertainment Co. (????) a day earlier withdrew a tender offer the potential suitor had proposed in late May to acquire 38 million XPEC shares or a 25.17 percent stake in the Taiwanese firm at NT$128 per share.

The acquisition price represented an almost 22 percent premium over XPEC's closing price of NT$105.00 on May 31. The total transaction was valued at NT$4.86 billion.

After the announcement of the tender offer, many investors rushed to pick up XPEC shares in a bid to participate in the tender offer. The buying lifted XPEC shares to a recent high of NT$114 on June 1. Share prices moved between NT$101 and NT$112 in the following sessions.

However, speculation emerged from Aug. 19 that Bai Chi Gan Tou would delay the acquisition, which started to push XPEC shares lower. The Japanese firm extended the deadline of the payment in late August, and even worse, on Tuesday, it announced it had decided to walk away from the deal, resulting in a settlement default.

A group of XPEC investors staged a protest in front of the Financial Supervisory Commission (FSC) on Friday, and demanded the FSC, the top financial regulator in Taiwan, launch an investigation into the failed tender offer.

While vowing to find out who will be held accountable for the botched tender offer, and help these investors to seek compensation, the FSC has filed a lawsuit with the Taipei District Prosecutors Office, accusing Bai Chi Gan Tou of violating the Securities and Exchange Act in Taiwan. The FSC also alleged that the Japanese firm has been involved in a malicious default on its tender offer contract.

A total of 3,605 XPEC investors have organized a self-help association to seek relief for their massive losses after the failed tender offer.

Hsu Ping-ho (???) from the XPEC self-help group said that XPEC minority investors, who had participated in the tender offer, had not ruled out the possibility of proposing to hold an extraordinary shareholder meeting to grasp a director seat and an independent director seat in the company and shore up their strength to seek compensation.

The FSC is scheduled to hold a public hearing on Sept. 9 to review the domestic tender offer mechanism and collect opinion about tender offers implemented in the major markets in Asia, the United States and Europe in an attempt to improve the country's system.

Source: Focus Taiwan News Channel