NEW YORK (
is seeking to become the first U.S.-traded Chinese stock to go back into a private structure through a management-led buyout, but its investment partner,
Baring Private Equity Asia Group
is pulling back from its commitment.
Harbin shares are down 11.3% in Tuesday afternoon trading.
Harbin Electric CEO Tianfu Yang and Baring previously announced a deal to take Harbin private at a price of $24 per share, with Goldman Sachs serving as the financial adviser to the Harbin CEO.
On Tuesday morning, Harbin Electric put out a press release stating that Baring's participation in the deal will now be limited to a right, not an obligation, to provide up to 10% of equity and/or debt financing.
The Harbin CEO stated his intention to pursue the $24 per Harbin share private buyout offer and seek alternative sources of financing.
Harbin shares were recently trading at $16.45 in the pre-market.
The Harbin Electric private buyout proposal garnered attention for being the first of its kind involving a U.S.-traded Chinese stock.
However, the company has also attracted the wrong kind of attention for a U.S.-traded China stock, including allegations that its books aren't in order and affiliations with an auditor that has been implicated in fraud allegations against other Chinese companies.
Last week, when Chinese company
had a fraud case brought against it, Harbin shares sank due to is use of the same auditing firm, Frazer Frost.
Ever since the Harbin Electric-Baring plan was announced, Harbin shares trading has indicated that merger arbitrage investors betting against the deal being completed.
-- Written by Eric Rosenbaum from New York.
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