China Automotive, investor disagree about redemption rights for convertibles

By Devika Patel

Knoxville, Tenn., March 27 - China Automotive Systems, Inc. is disputing the redemption rights of an investor regarding a $35 million convertible note due Feb. 15, 2013, according to an 8-K filed Friday with the Securities and Exchange Commission.

The debt was sold to Lehman Brothers Commercial Corp. Asia Ltd. and YA Global Investments, LP.

According to the terms of the notes, the investors had the right to require the company to redeem the notes if the 20-day weighted average price of company's shares fell below the threshold price of $3.187. As the company noted in the filing, this occurred over the 20 trading days ending March 16.

The company notified the investors of this occurrence, and, as of March 24, it said it had not received any redemption notices from the investors.

However, on March 27, the company said it received a faxed letter dated March 26 from YA Global, saying the investor was electing to exercise its redemption rights and requiring the company to redeem in cash, all amounts due under YA Global's $5 million of convertible notes.

The company maintains that the investors' redemption rights have lapsed. YA Global, however, disagrees. The company said in the filing that it is seeking legal counsel to resolve this matter.

China Automotive is a power steering components and systems supplier based in Jingzhou City, China.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.