In yet another instance of private equity firms teaming up with founders of U.S.-listed Chinese companies to take them private, last week, Edward Tian, co-founder of AsiaInfo-Linkage joined a consortium led by CITIC Capital to make a $890 million privatisation offer to his Nasdaq-listed telecommunication software services provider.

The transaction saw the involvement of a number of law firms including Davis Polk & Wardwell, Shearman & Sterling, Skadden, Arps, Slate, Meagher & Flom, Akin Gump, Ropes & Gray, Fried, Frank, Harris, Shriver & Jacobson and Paul Hastings.

A few days later, as if to further demonstrate this accelerating trend, China’s biggest publicly listed technology outsourcing company Pactera Technology announced a privatisation proposal of $680 million by its management and Blackstone Group.

What’s more, if Pactera’s take-private succeeds, according to reports, it may merge with its major rival Camelot Information System, who had also made a privatisation proposal in March this year.

Quitting

According to statistics from investment bank Roth Capital Partners, in 2012, 27 China-based companies with U.S. listings announced plans to go private through buyouts, up from 16 in 2011 and six in 2010.
Meanwhile, just three Chinese companies went public on U.S. exchanges in 2012, a continuing sharp drop from 12 in 2011 and 41 the year before that.

The biggest leveraged buyout in China, so far, has been the $3.7 billion acquisition of indoor advertiser Focus Media by a Carlyle-led consortium, which was approved by the company's shareholders last month. Other significant U.S. delisting deals include that of online game operator Shanda and wireless coverage products maker China GrenTech.

About 300 China-based companies still have shares trading in the United States on exchanges, or "over-the-counter" between individual dealers. We may see a number of them follow the privatisation path in the next two or three years, according to market analysts.

The motivation may vary in each case, but in general, a combination of factors has fuelled this trend, lawyers suggest. A key concern is that the stock prices those Chinese companies are trading at are generally low, which “cannot reflect the true value of the company,” according to Anthony Zhao, a partner at Zhong Lun.

U.S.-listed Chinese companies in the consumer staples sector, for example, were trading recently at a 67 percent discount to comparable Chinese companies on the Hong Kong Exchange, according to investment bank Morgan Joseph.

As for AsiaInfo and Pactera, the former's shares lost half their value in two years to 2011, while the latter’s shares were down 33.8 percent this year. In contrast, the NASDAQ, where both of them are listed, is up 15.9 percent.

Peter Huang, partner at Skadden, Arps, Slate, Meagher & Flom who has represented a number of Nasdaq-listed Chinese companies’ take-private transactions, believes the most important factor is that these companies find that the benefits of maintaining a public float in the U.S. no longer justifies the costs associated with it.

“… particularly in light of the depressed trading prices for Chinese issuers, which make it difficult and more costly to raise additional capital through the public market,” he says.

Also, following a number of accounting scandals and in compliance with the SEC disclosure demands, the level of distrust over Chinese issuers has increased greatly, although some of which may not be justified. It has frustrated and disappointed controlling shareholders and the management over the performance of their stocks, adds Huang.

Another driving force for privatisation is the change of development strategy, notes Zhao. In some cases, the fund raised through the stock market is no longer a priority for the company.

“With access to capital from sponsors and banks and confidence in the Chinese market, I think many founders consider now a good opportunity to buy back their companies to allow greater potential for restructuring and growth without public scrutiny,” says Miranda So, partner at Davis Polk & Wardwell.

Funding

These recent deals have demonstrated the buyers’ “ability to obtain secured, timely financing” when proposing to take a company private, as this is one of the most important factors.

“If buyers can find financing at a reasonable cost and believe in the longer-term future of their companies, taking their companies private is an option for them to consider,” Huang says.

At this point in time, it is notable that private equity firms are actively backing U.S.-listed companies’ going-private deals, at times even taking the lead. The AsiaInfo bidding, for example, was led by CITIC Capital rather than the company’s management as was the norm in previous cases.

The slumping prices of Chinese companies on U.S. stock exchanges appear to be a bargain for the PE firms to put their money in during the global downturn. Despite the obvious slowdown, China still presented an economic growth rate of 7.7 percent in the first quarter of this year, higher than most of the world, which means Chinese companies - excluding the scandal-haunted ones of course - to some extent, remain attractive to the increasingly discerning funds.

Successful precedents have proved how much a successful China deal can pay off. The Carlyle Group, for example, made a $4.3 billion profit excluding dividends - five times what it invested - when it exited China Pacific Insurance (Group) Co Ltd, according to Reuters data. But the same fund also had high-profile deals gone sour including that of China Agritech, which was found to be connected to accounting frauds and was delisted from Nasdaq in May 2011.

Like China Agritech, many Chinese companies entered U.S. markets through so-called reverse mergers in which a company merges with a U.S. shell company. Consequently, it increased the complexity for outside buyers to investigate the true circumstances.

“From the sponsors’ perspective, due diligence is very important and can be challenging. For example, if the company has been the subject of rumoured investigations or alleged accounting fraud or if the company’s assets are held under a VIE structure that may present regulatory uncertainties. It would be advisable to carefully look at these issues and their impact on the business as well as any potential hurdles on a possible relisting in the future,” says So.

Shareholder lawsuits

In the AsiaInfo case, a shareholder named Guanghui Cai has already filed a case against the directors of AsiaInfo, contending that the stock is undervalued and the board is violating its duty to get the best price for the stock. The plaintiff has asked the judge to stop the buyout under its present terms, and to award damages and court costs to him. The lawsuit was submitted to the Delaware Chancery Court in Wilmington.

Even before Cai’s filing, several U.S. law firms including Holzer Holzer & Fistel, Briscoe Law Firm, Brodsky & Smith, Pomerantz Grossman Hufford Dahlstrom & Gross, Powers Taylor, Harwood Feffer and Lifshitz, among others, had already announced they were investigating whether the board of AsiaInfo had complied with its fiduciary duties.

The CITIC Capital-led consortium agreed to pay $12 per share for Asiainfo, 2.8 percent higher than Asiainfo's closing price of $11.68 on the previous day’s trading. It is a small premium, although when CITIC Capital made its initial bid at the same amount in January 2012, the trading price was well below it.

Some people think the upsurge of stockholder litigation could mean a reopening of bidding, and eventually, a higher offer price for the Delaware-registered AsiaInfo. But similar legal action took place when the Focus Media buyout was announced, but it did not prevent the privatisation from being consummated. This was so thanks partially to the fact that Focus Media is a Cayman Island corporation, according to Huang.

“If the company is a Cayman or BVI company, shareholders litigation is generally not a big concern, as demonstrated by the dismissal of the shareholders litigation in the Focus Media case,” he says.
Although for the companies that are incorporated in these off shore islands, these standards are not clearly required as there are no court cases imposing these requirements. In Delaware, a going-private transaction requires the approval of a special committee of the board consisting of independent, disinterested directors and the approval of a majority of the minority shareholders, says So.

“Going-private transactions are ‘conflict of interest’ transactions,” she says. Directors, in discharging their fiduciary duties, should satisfy themselves that the transaction is fair and in the best interest of the company and its shareholders.

Although most go-private cases do not involve many regulatory approvals, a deal by a U.S. public company has to acquire the nods of a majority of its shareholders. The merger itself requires shareholders’ approval at different thresholds in different jurisdictions. For example, in Cayman, it is two-thirds, whilst for the BVI and most U.S. states, a simple majority will do, though in many cases, involving U.S.-incorporated companies. The special committees often require an affirmative vote from the majority of the shareholders who are not affiliated to the buyer, says Huang.

Nonetheless, stockholder litigation is an “inevitable” thing associated with U.S. public deals, according to Alan Mendelson, partner at Latham & Watkins. Shareholders very commonly complain about directors “failing to satisfy the fiduciary duties”, and sometimes, buyers are also named as defendants.
“These lawsuits are usually settled for less than $1 million, although settlement costs in some instances can be higher,” says Mendelson.

What’s next?

With the involvement of private equity investors, it will not be incorrect to assume that these companies will, in the next few years, seek to relist somewhere else or go for another sale. For instance, Hong Kong is being pitched by bankers as a favourable destination of future relisting.

“The idea is that the markets here understand the China story better and will, therefore, hopefully assign a higher valuation to the stocks,” explains Mark Lehmkuhler, another Hong Kong-based partner at Davis Polk.

Mainland China is no doubt another choice. Zhao suggests that Chinese lawyers be aware of some specific requirements of PRC law when dealing with the needs of returning “red-chips.”

“No matter what approach it plans to take - IPO, buying a shell, or exchanging shares with a domestic public company, the Chinese securities laws and regulations have to be taken into account,” he says.
In this sense, problems like horizontal competition and related party transactions would potentially emerge. Also, since there are macro-controls over certain industries, lawyers should figure out sophisticated structuring to meet the market access conditions and to acquire the special approvals the domestic capital market requires.

“When there are private equities and other investors involved in the privatisation, antitrust law would probably become relevant,” he adds. In addition, leveraged buyout also concerns foreign exchange policies. Creative methods, such as loan provisions to the offshore parent company, may also be considered.

(Additional reporting by Dena Aubin and Olivia Oran of Reuters)

核心导读>
标题> 私募基金推动美股公司私有化

亚信联创和文思海辉是在美上市中国公司私有化之路的最新典型例子：私募股权投资者牵头，股东诉讼引爆眼球。

作者：Liu Zhen

上周，在又一个私募股权企业与在美上市中国公司创始人联袂推动私有化的案例中，亚信联创联合创始人田溯宁加入中信资本牵头的财团，要约以 8.9 亿美元的对价私有化他在纳斯达克上市的软件服务企业。
该交易有多家律师事务所参与，包括达维、谢尔曼•思特灵、世达、艾金•岗波、瑞格、法朗克和普衡等。

几天以后，似乎是为了印证这一美股公司私有化加快步伐的趋势，中国最大的上市技术外包服务公司文思海辉也宣布了一项由管理层和百仕通集团共同出资 6.8 亿美元的私有化方案。

另有报道称，如果文思海辉私有化成功，它将与其主要竞争对手柯莱特信息系统合并，后者在今年三月也已提出了自己的私有化方案。

退市

投资银行罗仕证券的统计显示，2012 年共有 27 家中国在美上市公司宣布计划通过收购实现私有化，而 2011 年为 16 家，2010 年仅为 6 家。

与此同时，2012 年仅有 3 家中国公司在美国上市，在 2011 年 12 家和 2010 年 41 家的基础上继续大幅下降。

迄今中国最大的杠杆收购案，是凯雷集团牵头的财团以 37 亿美元对价收购室内广告企业分众传媒，该交易已于上月获得该公司股东大会批准。其他主要美国退市交易包括网络游戏运营商盛大网络和无线网络覆盖产品制造商国人通信。

目前仍有大约 300 家中国公司的股票在美国各大交易所上市，或通过个别交易商在“场外”流通。市场分析师表示，未来两三年其中许多公司也可能将走上私有化之路。

不同公司的动机可能不同，但律师们认为，一般来说造成这一趋势的因素有多个。其中一个主要担忧是这些中国公司的股价目前普遍较低，“无法反映公司的真实价值”，中伦律师事务所合伙人赵靖表示。

例如，投资银行 Morgan Joseph 研究发现，日用消费品行业的在美上市中国公司的股价比在香港交易所上市的同类中国公司低 67%。

而对于亚信联创和文思海辉的例子，前者的股价在从 2011 年以来的两年里惨遭腰斩，而后者的股价在今年也已下跌 33.8%。而相反的是，这两家公司所处的纳斯达克指数则上升 15.9%。

世达律师事务所合伙人黄小霈代理过大量在纳斯达克上市的中国公司私有化交易，他认为最重要的因素是这些公司认为在美国上市的好处与相关成本相比不再相称。

“… 尤其是由于这些中国发行人的交易价格受到严重压制，使其很难从公开市场募集额外的资本，成本也更高，”他说。

另外，在经历一系列的会计丑闻和拒绝美国证监会披露要求后，对中国发行人的不信任已经大幅上升，尽管部分可能毫无根据。黄小霈补充说，控股股东和管理层对股价表现非常沮丧和失望。

而赵靖指出，私有化的另一个推动因素是发展战略的变化。在部分案例中，通过股市融资不再是公司的优先重点。

“随着获取投资人和银行资金的渠道理顺，加上对中国市场的信心，我想许多创始人认为目前是回购公司的好机会，从而更好地发挥重组和增长潜力，而不必接受公开审查，”达维律师事务所合伙人 Miranda So 表示。

融资

最近的交易展现了收购方在提出公司私有化建议时“及时取得有保障的融资的能力”，因为这是最重要的因素之一。

“如果收购方可以按合理的成本找到融资，并对公司的长期未来有信心，公司私有化则是他们需要考虑的选择之一，”黄小霈说。

在当下，值得注意的是私募股权企业正积极支持在美国公司的私有化交易，有时甚至牵头主持。例如，与之前案例的典型情况不同，亚信联创的要约收购就是由中信资本而不是公司管理层牵头。

中国在美上市公司股价跌跌不休，似乎是私募股权企业在全球衰退时期投资的好机会。尽管明显减速，但中国经济在今年一季度仍然录得 7.7% 的强劲增长，超过全世界大部分国家，这意味着中国公司（当然陷入丑闻的公司除外）在一定程度上对越来越挑剔的基金仍有吸引力。

成功的先例也已证明成功的中国交易可以换得多大的回报。例如，路透社的数据显示，凯雷集团退出中国太平洋保险（集团）股份有限公司时，赚得 43 亿美元的利润（不含股利），是最初投资的五倍之多。但该基金也有严重的马失前蹄之时，例如艾瑞泰克，该公司被认定与一系列会计欺诈有关，在 2011 年 5 月从纳斯达克摘牌。

与艾瑞泰克类似，许多中国公司通过所谓的逆向兼并，即通过兼并美国壳公司的方式进入美国市场。结果增加了外部收购方调查真实情况的难度。

“从发起人的角度看，尽职调查非常重要，而且可能非常困难。例如，如果公司陷入传言的调查或者会计欺诈指控，或者公司的资产由利益可变实体（VIE）持有，可能会带来监管不确定性。因此要谨慎对待这些问题及其对业务的影响，以及对未来可能重新上市的任何潜在阻碍，”So 律师称。

股东诉讼

在亚信联创私有化中，一名叫 Guanghui Cai 的股东已经起诉亚信联创董事会，称公司股票被低估，董事会违反了尽力保护股价的职责。原告要求法官阻止现有条款的收购交易，并判决向他支付损害赔偿和法庭费用。该诉讼已在特拉华州威明顿衡平法院立案。

甚至在 Cai 起诉前，多家美国律师事务所已经宣布他们在调查亚信联创董事会是否违反信托责任，包括 Holzer Holzer & Fistel、Briscoe Law Firm、Brodsky & Smith、Pomerantz Grossman Hufford Dahlstrom & Gross、Powers Taylor、Harwood Feffer 和 Lifshitz 等。

中信资本牵头的财团同意以每股 12 美元的价格收购亚信联创，比前一交易日亚信联创的收盘价 11.68 美元高 2.8%。这一收购溢价相当低，尽管中信资本在 2012 年 1 月首次以同样的金额要约收购时，公司股价还远远低于这一金额。

一些人认为股东诉讼的爆发可能意味着重新要价的开始，并最终抬高在特拉华州注册的亚信联创的要约价格。分众传媒收购案宣布时也发生了类似的诉讼，但并未阻止私有化的最终成行。黄小霈表示，这部分得益于分众传媒是一家在开曼群岛注册的公司。

“如果公司在开曼群岛或英属维尔京群岛注册，股东诉讼一般不会是大问题，这可由分众传媒案中股东诉讼被驳回的例子证明，”他说。

尽管对于在这些离岸群岛注册的公司，这些标准并无明确要求，因为没有法庭案例施加这些要求。在特拉华州，私有化交易要求一个由独立、无利益关系的董事组成的董事会特别委员会批准，以及大部分小股东的批准，So 律师说。

“私有化交易属于‘利益冲突’交易，”她说。董事会在履行其信托责任时，应当确保交易的公正性并且符合公司和其股东的最大利益。

尽管大部分私有化案例并不涉及太多监管批准，但美国上市公司提出的交易必须取得大部分股东的首肯。在不同司法管辖区，兼并本身也有不同标准的股东批准要求。例如在开曼群岛，比例为三分之二，而英属维尔京群岛和美国大部分州为简单多数，但在许多涉及美国注册公司的情况下，特别委员会常常要求大多数与收购方无关联关系的股东批准，黄小霈称。

尽管如此，瑞生律师事务所合伙人 Alan Mendelson 表示，股东诉讼是美国上市公司交易“不可避免”的事情之一。股东经常抱怨管理层“不履行信托责任”，有时收购方也成为被告。

“这些诉讼一般用几十万美元就能和解，尽管部分案件的和解成本可能要高一些，”Mendelson 说。

未来走向？

由于私募股权投资者的参与，假设这些公司将在未来几年内在世界其他地方重新上市或被再次出售并非毫无理由。例如，香港就被投资银行家们视为重新上市的理想目的地。

“思路是这些市场对中国股市更容易理解，因此有希望获得更好的估值，”达维律师事务所另一位常驻香港的合伙人 Mark Lehmkuhler 解释道。

当然中国大陆是毫无疑问的另一个选择。赵靖称中国律师应当注意处理“红筹股”回归时的某些具体中国法律要求。

“不论是采取哪种方法，IPO、借壳或与国内上市公司换股，都必须考虑中国证券法律法规的要求，”他说。
在这个意义上，平行竞争和关联交易等问题可能会显现。另外，由于特定行业面临宏观调控问题，律师们还需设计无懈可击的结构，以满足市场准入条件，并取得国内资本市场要求的特殊批文。

“当私募股权基金和其他投资者参与私有化时，可能会涉及反垄断法的问题，”他补充说。此外，杠杆收购也会涉及外汇政策。向离岸母公司提供贷款等创新方法也可以考虑。

（路透社 Dena Aubin 和 Olivia Oran 对本文亦有贡献）

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