Xidelang board to meet over Navis' buyout offer

[hlk]

XIDELANG Holdings Ltd's board is expected to meet
tomorrow to discuss the approach made by private equity firm Navis
Capital to buy out the company's major stakeholder.



Xidelang, China's second largest maker of running and skateboard shoes,
is 54.6-per cent owned by HongPeng International Holdings Ltd.

HongPeng is in turn controlled by Mark Ding Peng Peng, who is also the managing director of Xidelang.

Days before Xidelang had informed the stock exchange of the offer from
Navis, Ding had told Business Times that he was frustrated with the
lacklustre performance of the company on the stock exchange.


Xidelang is the third China-based company to be listed on Bursa
Malaysia. Its share price had fallen by as much as 35 per cent last
year.





Up to the nine months ended September 30, 2011, Xidelang's pre-tax
profit stood at RM84.52 million, while for the 12 months of 2010,
Xidelang's pre-tax profit stood at RM106.78 million.

Additinally, Xidelang also has about RM134 million in cash while its book value per share comes in at just under 60 sen.

"Ding will reject the offer from Navis, and instead put in a rival
proposal to create liquidity in the market place," a person familiar
with the company said yesterday.

The proposal, which Ding plans to table to the board, calls for the company to reward its shareholders.

"It will be a script-based reward exercise," said the source.

As such, Ding will likely propose that Xidelang understake a bonus
issue and a warrant exercise so that shareholders who did not directly
benefit from Xidelang's growing business will be rewarded in the market
place.

As it stands, Xidelang is the only mainland-based company which has a consistent dividend policy in place.

Xidelang paid out a 1.5 sen dividend in 2010 and a one sen dividend the
following year, giving shareholders a 12-month dividend yield of 2.63
per cent a year.

Navis, run by former executives of Boston
Consulting Group, manages about US$3 billion(RM9.3 billion) in equity
capital and is believed to want to take Xidelang private.

It also plans to group Xidelang with other shoe makers from China and list them as one entity on the Hong Kong Stock Exchange.