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Chinese actions Sinovac Biotech Ltd. (NASDAQ: SVA) have been frozen since 2019 in the midst of shareholders’ disputes when market capitalization was around $ 500 million
Sinovac has developed a successful cocvid vaccine and has more than $ 10 billion in cash, but investors have not had dividends or liquidity
The current council repels a competing list of administrators supported by the founder / CEO as well as large investors representing more than 31% of the shares in circulation
The current council made announcements that may have contributed to the resignation of Grant Thornton, preventing the 2024 financial deposit
Experts in accounting and governance said that Corpgov Sinovac would find it difficult to obtain a major listener with the current council
Professor Charles Elson told Corpgov that potentially “rush” the departure of Grant Thornton “is about as bad as he gets” and raises questions about corporate governance under the current council
The two parties plan to pay a dividend of $ 55 / shares, but Sinovac has much more value which will require trading to use investors to benefit
The shareholders will decide to keep or replace the board of directors at a meeting on July 8
Choosing a winner in biotechnological stocks is quite difficult. Imagine investing in a small business that has become one of the largest suppliers of codvised vaccines in China, which led to a round of several billion dollars and a potential increase of 25x, to see the actions frozen for years. The question now: can a new board of directors do better to unlock the value?
Meet Chinese Sinovac Biotech Ltd. (SVA), a company listed in Nasdaq which was involved in disputes for shareholders for many years. About a year before the first whispers on Covid, the stock was frozen after an extremely rare event: So-called poison pill has been activatedtriggering a flood of new actions issued to certain shareholders and a commercial intervention on the scholarship.
The actions, although remained listed, have not been negotiated since the beginning of 2019. The following year, the company managed to develop a covid vaccine which was widely used – especially in China – resulting in huge financial success. All in all, the company has around $ 10.3 billion in cash, which is equivalent to around $ 140 per share, excluding any value allocated to the operating activity, according to Saif Partners, the largest shareholder in the company with a participation of 15%.
The fate of the company – and its cash treasure – now depends on a vote of shareholders on July 8 to decide to replace the current council. The Challenger group, led by Saif Partners, includes the founder and CEO of Sinovac Weidong Yin with Vivo Capital and Advantech Capital, which holds 16% of the two investment companies. Spokes on Saif, Advantch and Vivo have all referred Corpgov to existing statements and refused to comment more.
On the other hand, supporting the current board of directors, President Chiang Li and his family office of 1 capital globe as well as two investment companies, Orbimed and Heng Ren Partners. A company spokesperson also directed CorpGov to already published public statements.
Unfortunately, the current board of directors has not made a lot of progress towards the deestion of actions – perhaps the most important short -term objective. On the contrary, the board of directors may have contributed to the resignation of its auditor, Grant Thornton, after having announced that he “evaluated certain business measures taken by the former board of directors”. Grant Thornton declared in a letter to Sinovac that one of the reasons for his resignation was that the announcement of the board of directors introduced “uncertainty” and that it would not be able to sign the company’s financial statements in 2024.
For its part, the board of directors argued that Grant Thornton’s departure was not linked to any of its measures. A depositing company cited Grant Thornton’s letter which indicated that “his resignation was not the result of disagreement with the [Company’s current board of directors]business or management.
Whatever the combination of factors that have triggered the departure of Grant Thornton, the loss of a high -level company can mean that the company will not find another major accounting firm to sign its figures, which puts the list of the company in danger. “At this stage, the board of directors seems to be something,” said an accounting expert who asked not to be appointed to Corpgov. “Other companies will be reluctant until it is eliminated.”
Indeed, the current council may have lost broader credibility, according to Charles Elson, founding director of the Weinberg Center for Corporate Governance of the University of Delaware. “This does not think well about a board of directors who would allow a auditor to resign – what is worse is that a board of directors precipitates the departure. This does not seem to be in the interest of the company or shareholders – the fiduciary obligation of the board of directors,” Elson told Corpgov. “You must ask yourself if it has been done to help the company or in the personal interest of the administrators.”
Professor Elson noted that the company had performed well with a very successful medication and that its operations are not the concern. “It goes beyond a performance problem and is a governance problem that they face,” he said.
The current council was also eroded at only four members after several departures. One of those who note is Pengfei Li, who was sentenced to prison after accusations, in particular an embezzlement and government documents and seals, apparently linked to his attempted control of a Sinovac subsidiary.
Interestingly, the Challenger group does not try to erase all existing directors. The slate actually includes two of the four current members of the board of directors, Chiang Li, who is himself a major investor in the company, with Yuk Lam LO who was elected during a vote of the previous shareholders.
Although a negotiation resumption can be the best result for shareholders looking for liquidity, there is also a discussion on a massive dividend of $ 55 by one, which would be welcome for those waiting for years without seeing a penny. It seems that the two advice support this dividend and even more, but the discussion of it only recently started when Saif began to attack. In addition, there is no reason why the dividend cannot be paid before the July meeting – even if the actions remain interrupted.
Finally, it is important to consider Sinovac as a prosperous company – far beyond Cavid. The company carried out $ 440 million in sales in 2023, and $ 121 million in the first half of 2024 (the company is highly seasonal and financial for the second half of 2024 has not yet been deposited), income from a variety of non -comfortable drugs and geographies. Although the company’s cash value can be around $ 140 per share, the real work of the new board of directors is to focus on the company’s concentration on its operations – rather than fighting and prosecution. After so many years, investors who vote for the change of the board of directors can finally collect the fruits of the underlying success of Sinovac.
