On June 27, 20II , Bumi PLCJ3 raised £707 million (US$l.1 billion) through a reverse merger,
a highly controversial way of going public, and essentially a back-door method for entering
the LSE hy merging with a UK shell company, thereby bypassing the scrutiny of listing via a
regular initial public offering. This approach was particularly popular with Chinese
companies eager to list in the US in the early 2000s. Many of them were later targeted by
short-sellers and experienced various adverse outcomes such as bankruptcy, dclisting, and/or
a serious drop in share price. Moreover, the SEC launched an investigation in 2010 against
some of these companies, focusing on accounting irregularities, which caused many of their
aud itors towithdraw duringthe process.
On June 27, 20II , Bumi PLCJ3 raised £707 million (US$l.1 billion) through a reverse merger,a highly controversial way of going public, and essentially a back-door method for enteringthe LSE hy merging with a UK shell company, thereby bypassing the scrutiny of listing via aregular initial public offering. This approach was particularly popular with Chinesecompanies eager to list in the US in the early 2000s. Many of them were later targeted byshort-sellers and experienced various adverse outcomes such as bankruptcy, dclisting, and/ora serious drop in share price. Moreover, the SEC launched an investigation in 2010 againstsome of these companies, focusing on accounting irregularities, which caused many of theiraud itors towithdraw duringthe process.
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