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Asia Cork May Be Setting Groundwork for Offering

Asia Cork (AKRK) is broadening share ownership among the company's top executives and board members, which could help to facilitate a possible public offering.

I had written earlier this week that the Chinese cork flooring maker may have remedied an outstanding liquidity issue concerning a past due payment of $700,000 and accrued interest owed to Ancora Greater China Fund as part of a funding arrangement in June 2008.

Part of my hypothesis was due to the close number of shares that the CEO and chairman pledged to secure the arrangement (7,630,814) vs. the amount of stock they disposed of, outlined in recent S-4 filings (7,930,000).

I also took a look at some recent S-3 documents that show that three board members were allotted an aggregate of 2.8 million shares.

The company has informed me that the 7.9 million shares were not transferred to Ancora, but rather to a number of high level executives in the company. This action broadens share ownership among the company's top executives and board members and will help to facilitate a possible public offering by meeting the stock market exchange listing requirements, and will also better link the interest of management personnel to the company.

So what does all this mean?

It seems that Asia Cork may be planning a public offering, a notion in line with some information disclosed in its 2009 September quarterly filing stating that it had "signed an exclusive financial adviser agreement with Global Arena Capital Corp. to act as the Lead or Managing or Co-Underwriter or Investment Banker in connection with a proposed public offering." The initial agreement expires on May 31, 2010, providing investors with a time window to speculate when an offering could occur.
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