Top Glove said to delay $1b Hong Kong listing amid US ban quandary

Photo by Clay Banks on Unsplash

Top Glove Corporation’s plan to list in Hong Kong and raise up to $1 billion has been delayed as the world’s largest rubber glove maker seeks to resolve a U.S. import ban on its products, sources with direct knowledge of the matter said.

The Malaysian firm, which is already listed in Kuala Lumpur and Singapore, flagged in late April it would sell 793.5 million shares in the listing, half what the company proposed in its application to the Hong Kong Stock Exchange in February.

However, the deal has stalled as the company awaits indications from U.S. Customs and Border Protection (CBP) on whether an imports ban would be lifted any time soon, the sources told Reuters.

Potential investors questioned Top Glove and its advisers on the sanctions during preliminary briefings ahead of the listing, they said.

Top Glove had hoped to complete the listing by the end of the second quarter in 2021, the sources said.

Top Glove did not respond to a request for comment. The sources could not be named as the information was not yet made public.

U.S. Customs prohibited the import of Top Glove products last year, saying it had found reasonable evidence at the company’s production facilities across Malaysia indicative of forced labour practices.

Customs said in March it had found evidence of multiple forced labour indicators in Top Glove’s production process, including debt bondage, excessive overtime, abusive working and living conditions, and retention of identity documents, and directed its officials to seize goods from the manufacturer.

EARNINGS FORECASTS

The North American market accounts for 22% of Top Glove’s total sales volume, according to its latest accounts.

Analysts had largely kept their earnings forecasts for the company intact and said diversion of trade to other markets could cushion the impact of sales loss in the U.S. market, as the pandemic continued.

CBP, in an emailed response to Reuters, said the length of the review process varies with the individual facts and circumstances of each case.

“CBP will not modify or revoke a Forced Labor Finding until it has information that all indicators of forced labor identified by the agency have been fully remediated and it is demonstrated that forced labor is no longer being used to produce the goods targeted,” it said.

Top Glove said in April it has resolved all indicators of forced labour in its operations and that this had been verified by the London-based ethical trade consultant Impactt Limited.

The company has argued a Hong Kong listing is not urgent as it has 2.36 billion ringgit ($573.09 million) cash on its balance sheet, the sources said.

Instead, a listing is being pursued to diversify the firm’s shareholder base and take advantage of the increased liquidity in Hong Kong’s markets compared to Kuala Lumpur and Singapore, one of the sources added.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.