Hongqiao fires back

China Hongqiao, the listed company of Shandong Weiqiao, has filed a defamation suit against Emerson Analytics. It was Emerson who published the short selling report in February.

The suit alleges that the Emerson report damaged the company’s reputation, and did not match the facts. The suits calls on Emerson to cease all further reporting on Hongqiao, and to compensate Hongqiao for losses incurred. The writ gives Emerson 14 days to respond.

Despite the tough times created by the short selling report, Hongqiao has been able to garner some important supporters. We understand that Hongqiao has been able to renegotiate some bank loans that would have matured next year, giving the company a US$700 million headache. We understand that Bank of China, ICBC and Agricultural Bank of China have all sent senior managers to the company’s headquarters.

Hongqiao got a less than enthusiastic response to their letter to CNIA, but there’s nothing like having skin in the game. If anyone is going to help them, it’s the banks. As the old saying goes, If I owe you $100 it’s my problem, but if I owe you $100 million, it’s your problem.

Hongqiao are not clear yet however. There’s still the matter of ongoing environmental inspections in their area, and the regulation that orders a cut of 30% of operating capacity during the 4-month heating season next winter.