{"id":510662,"date":"2021-07-08T00:03:00","date_gmt":"2021-07-08T04:03:00","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/buyer-consortium-warns-hollysys-shareholders-not-to-be-misled-by-companys-continuing-incomplete-disclosure-and-delaying-tactics\/"},"modified":"2021-07-08T00:03:00","modified_gmt":"2021-07-08T04:03:00","slug":"buyer-consortium-warns-hollysys-shareholders-not-to-be-misled-by-companys-continuing-incomplete-disclosure-and-delaying-tactics","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/buyer-consortium-warns-hollysys-shareholders-not-to-be-misled-by-companys-continuing-incomplete-disclosure-and-delaying-tactics\/","title":{"rendered":"Buyer Consortium Warns Hollysys Shareholders Not to Be Misled by Company\u2019s Continuing Incomplete Disclosure and Delaying Tactics"},"content":{"rendered":"

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Buyer Consortium Warns Hollysys Shareholders Not to Be Misled by Company\u2019s Continuing Incomplete Disclosure and Delaying Tactics<\/b><\/p>\n

BEIJING–(BUSINESS WIRE<\/a>)–
\nThe buyer consortium (the \u201cConsortium\u201d) consisting of Mr. Shao Baiqing, Ace Lead Profits Limited and CPE Funds Management Limited today issued a letter to shareholders of Hollysys Automation Technologies Ltd. (NASDAQ: HOLI) (the \u201cCompany\u201d or \u201cHollysys\u201d) regarding the Consortium\u2019s proposed acquisition of the Company. The Consortium strongly believes that the proposed acquisition is the best and only option to shareholders to achieve immediate liquidity on their investment, at a highly attractive premium and with far greater certainty. The Consortium reminds shareholders of the Company as of June 24, 2021 to sign, date and return the WHITE consent card as soon as possible before July 22, 2021.\n<\/p>\n

\nThe full text of the Consortium\u2019s letter is as follows:\n<\/p>\n

\nDear Fellow Shareholder,\n<\/p>\n

\nWe, the buyer consortium (the \u201cConsortium\u201d or \u201cwe\u201d) consisting of Mr. Shao Baiqing, Ace Lead Profits Limited, and CPE Funds Management Limited would like to remind you to please submit your consent<\/b> to our resolutions concerning the proposed acquisition (the \u201cProposed Acquisition\u201d) of all outstanding ordinary shares of the Company not already owned by the Consortium at a price of $17.10 per share in cash, by following the instructions on the WHITE consent card<\/b>.\n<\/p>\n

\nIf you hold shares through a bank or broker (i.e., in \u201cstreet-name\u201d or as a \u201cbeneficial owner\u201d) and have not yet received the Consortium\u2019s consent materials by mail or email, please contact your bank or broker as soon as possible and request instructions regarding the WHITE consent card. If you are a record holder (i.e., you hold shares in your own name on the register of members of the Company), please promptly contact Innisfree M&A Incorporated (\u201cInnisfree\u201d), the firm assisting the Consortium with the consent solicitation, at the telephone number or email address below to request a copy of the WHITE consent card.\n<\/p>\n

The Time for Action is NOW<\/b><\/p>\n

\nWe continue to note that five months have passed since the Consortium submitted the Proposed Acquisition on January 29, 2021 (see here<\/a><\/i><\/span>). The Company\u2019s board of directors (the \u201cBoard\u201d) has not yet provided any updates on its alleged review, and yet has the temerity to continue to tell shareholders to take no action, even with respect to the recent launch of our consent solicitation.\n<\/p>\n

As Shareholders Wait, Value Deteriorates<\/b><\/p>\n

\nDuring the seven months since our initial acquisition proposal in December 2020, the value of your investment has decreased precipitously. The Company\u2019s operations and financial conditions have plummeted while the Board and management team have been using the Company\u2019s valuable resources to entrench and enrich themselves. The Company\u2019s cash-generating abilities have rapidly declined in the past three quarters \u2013 all while the overall economy in China has emerged from the COVID-19 pandemic with strong growth. These facts suggest that the Company is facing fundamental issues in its operations and will likely struggle with its core business activities over the long-term. Indeed, J.P. Morgan lowered its forecast of the Company\u2019s stock price to $15 per share in its analyst report dated March 30, 2021 and maintained its $15 per share forecast in its report dated May 14, 2021. The Company\u2019s stock price has lagged far below our $17.10 offer.\n<\/p>\n

\nWhile the Company\u2019s most recent 6-K of July 6, 2021 attempts to project a positive outlook for its fiscal year 2021 ended June 30, 2021, the data is misleading on its face. The Company\u2019s projected revenue for fiscal year 2021 is approximately $560 million to $595 million, representing 11% to 18% growth over fiscal year 2020<\/i> – a year when almost every business suffered. However, a comparison to the Company\u2019s pre-pandemic<\/i> revenue of $570 million for the fiscal year 2019 reveals a negative<\/b>to<\/b>flat<\/b>growth rate of -1.8% to 4.4%.<\/b> Notably, the Company also conveniently omitted any profitability forecasts, such as net income, net cash generated by operating activities, or profitability margin. It is logical to infer that to the extent any minor growth in revenue is achieved, it will be at the expense of a declining margin and diminished overall market competitiveness.\n<\/p>\n

Proposed Acquisition is the ONLY Feasible Way to Realize Immediate Liquidity <\/b>at a Compelling Premium<\/b><\/p>\n

\nMore than five months have passed since the Company promised that the Board and management were \u201cdeeply committed to maximizing shareholder value and will thoroughly evaluate any opportunities or strategic alternatives that would advance that goal\u201d. To date, the Company has provided no disclosure of any \u201cstrategic alternatives\u201d or any feasibility study. We believe, in fact, that \u2013 other than the Proposed Acquisition \u2013 there are no viable value-creating alternatives available to the Company. Shareholders should be advised that:\n<\/p>\n