Mejority writes down XPD value, investigates legal action
The investor of Chinese soccer boot maker XPD is taking the company to court, raising concerns as to its governance and writing down its value to zero.
Mejority Capital (ASX:MJC) today told the market it would have no choice but to write down core investment XPD (ASX:XPD) and commenced federal legal action to access documents to see if they can sue for damages.
They said their holding in the company had diminished from more than $1 million at June 30, 2016 to $292,548 this year.
XPD has been suspended from trade since October 11 pending ASX inquiries into the shareholdings of its chief and major shareholder.
“This issue does not appear as though it will resolve itself before the 31 December 2017 balance date, in which case the board of Mejority will have little choice other than to fully provide for its investment, writing down the value to zero,” Mejority told the market.
Mejority said it had been concerned with aspects of the affairs of its investment dating back to the start of the year, when XPD suspended dividends pending acquisition opportunities but never followed through.
They say there are several potential avenues for legal action including whether there was misleading or deceptive conduct involved in their share buy-back scheme.
But obtaining the documents would be the first step – the initial hearing is scheduled for the Federal Court in Perth next February.