Orient Paper shares are down 40% this week after Muddy Waters Research said in a research report that the company is a "fraud" and that it "overstated its 2008 revenue by 27 times." The firm cited financial statements by He Bei Oriental Paper Co. Ltd, which it claims is an operating subsidiary of Orient Paper.
Orient Paper responded to the fraud allegations Thursday afternoon, saying that it "categorically denies these allegations and has instructed its legal counsel to contact Muddy Waters and explore all legal options against it for publishing and distributing such a report." Orient Paper claims that Muddy Waters was incorrect in citing financial statements of He Bei Oriental Paper Co. Ltd, and that the company's operating subsidiary is actually named Hebei Baoding Orient Paper Milling Co., Ltd. "The motivation behind this report is transparent and we look forward to providing our investors and other stakeholders with additional information shortly to further rebut these baseless allegations," Orient Paper CEO Zhenyong Liu said in a statement. Shares of Orient Paper were rebounding, rising 50 cents, or 9.8%, to $5.59 in the premarket session. The three-month average daily volume for Orient Paper is 257,000, according to Yahoo! Finance. Elsewhere, Blockbuster ( BBI) may see increased trading volume after the company said late Thursday that it had entered into an forbearance agreement with its senior secured bondholders, providing it with more time and flexibility to find recapitalization opportunities. In addition, the New York Stock Exchange said it will begin the delisting process after Blockbuster shareholders did not approve a plan to combine the company's Class A and Class B common stock or the option for a reverse stock split. The three-month average daily volume for Blockbuster is 9.37 million. Wilshire Bancorp ( WIBC) shares dropped by $1.28, or 15%, to $7.27 in the premarket session after the company forecasted a second-quarter net loss and said it would temporarily suspend its common stock dividend. Wilshire was paying a quarterly dividend of 5 cents per share for a dividend yield of 2.3%. Wilshire said its second-quarter net loss will not exceed $5 million, or 17 cents a share. The company blamed the loss on an elevated provision for loan losses and an increase in net loan charge-offs. The 50-day average daily volume for Wilshire is 130,000, according to the Nasdaq. DemandTec ( DMAN) shares should also see increased volume after the retail software company notched a first-quarter adjusted loss of 9 cents a share on revenue of $18 million, compared to analysts' expectations for a loss of 7 cents a share on revenue of $17.6 million. The 50-day average daily volume for DemandTec is 223,000. -- Written by Robert Holmes in Boston. Check out all of Friday's high-volume, under-$5 stocks at the Dollar Store. View the Dollar Store portfolio on StockPickr. Follow Robert Holmes on Twitter and become a fan of TheStreet.com on Facebook.
|Orient Paper Exclusive Orient Paper: Story Behind 'Fraud' Report|