Chinas GTS Chemical Holdings withdrew from the London Stock Exchange last week, saying the listing was too expensive and provided too little help in its quest for more capital.
The company, which is headquartered in Shandong province, listed on the London exchanges Alternative International Market in mid-2014, declaring it wanted to raise funds to help it expand. The results appear to have been disappointing, though, and while GTS still wants to grow its lubricant and chemical businesses, it has decided to seek funds elsewhere.
The primary purpose of the companys admission [to AIM] was the opportunity it provided to raise capital in support of the companys growth prospects, GTS stated in a June 29 filing announcing it would ask stockholders to approve the delisting.Given current market conditions, and in particular the lack of investors for businesses operating in [China], the directors are of the opinion that it is difficult for the company to attract any or meaningful equity investment through its listing on AIM and accordingly the directors will be assessing potential alternatives to raise growth capital.
The de-listing was approved during a July 25 shareholders meeting and took effect August 2. In addition to the failure to attract capital, the company cited the costs of AIM listing as a reason for its decision to withdraw.
GTS is Chinas largest producer of ammonium sulfite and has traditionally focused on production of that and other specialty chemicals, some of which are used by the lubricants industry. In 2013 it began marketing finished lubricants, and by early last year they accounted for approximately 20 percent of its revenue. The company markets finished lubricants under the Ogistar, Changyun and Qiaoke brands and last year finished building its second blending plant, a facility in Shandongs Gaotang County with capacity of 60,000 metric tons per year.
De-listing relieves GTS of requirements that it file quarterly and annual reports about financial performance. It is also no longer bound to publicly report a range of transactions or administrative changes or to seek stockholder approval for various actions.
GTS acknowledged that buying and selling of GTS stock will become more difficult now that its shares are no longer listed on a stock exchange, but the number of outstanding shares is relatively small. CEO Cheng Lui offered to buy all outstanding shares. Luis SinoEuro Runtai currently holds 76 percent of shares, and if it acquires all outstanding shares its stake will rise to 81 percent.
In the process of delisting, GTS reduced the size of its board of directors from seven to three. The three remaining directors are Liu, Chief Financial Officer Xinlin (Roy) Su and Vice President Xueying Zhang.