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Whitecat Takes over Shell Stock for Capital
By taking a shell unit of a listed company, household cleaning product maker Whitecat (Group)�� Co Ltd will gain more capital force to sharpen its competitive edge.
Last Monday, Shuanglu Refrigerator Co Ltd, which fell under particular transfer (PT), announced that its board of directors had approved the assets reorganization with the Shanghai-based Whitecat.
Whitecat will inject its wholly-owned subsidiary company, Shanghai Toothpaste Plant Co Ltd, into Shuanglu. The assets reorganization will take into effect on May 31.
Shuanglu Co Ltd will then be renamed as Shanghai Whitecat Shareholding Co Ltd and its share (600633) will be called PT Whitecat. Trading on its shares has been suspended from May 27 to June 26.
Whitecat Co Ltd said the assets reorganization created a win-win situation for both Shuanglu, who is managing to escape the fate of delisting, and Whitecat. Shanghai Toothpaste gains the most with a new channel to raise development funds.
Hou Shaoxiong, the managing director of Shanghai Toothpaste, said the assets reorganization is expected to help further glorify the toothpaste brands of his company with more capital collected from the market.
The Shanghai Toothpaste Co markets five toothpaste brands including Maxam, Zhonghua, Shanghai, Baiyu and Liulanxiang.
Hou said the company aims to build Maxam into a household name around the world.
"My company's toothpaste boasts excellent quality and low prices compared with foreign-branded ones, but it did not achieve its deserved success in the market because of low investment on its marketing," Hou said.
For example, the advertisement spending for many foreign-brands such as Signal, were more than 160 million yuan (US$19.32 million), while that of Maxam cost 20 million yuan (US$2.4 million).
Shanghai Toothpaste just reclaimed the brand of Maxam from Unilever at the beginning of this year.
The company signed a deal to lease two of its toothpaste brands, Maxam and Zhonghua, to Unilever for five and eight years in 1996 which was considered as a new way for co-operation then.
Maxam saw serious declines in sales over the past five years, which the company claimed was a result of Unilever's deliberate attempt to play down the brand.
Hou said the company will try its best to regain its past position in the market.
Before the lease, sales of the 38-year-old Maxam occupied more than 10 per cent of the domestic market and 70 per cent of China's annual toothpaste exports.
Hou refused to release the current market share of Maxam, saying the decline was serious.
The company also plans to invest in developing more kinds of products for oral health and introducing advanced production lines.
Meanwhile, Hou said the company will also march into the area of new packaging materials and special material printing, which he considered had bright prospects.
However, according to stipulations of the China Securities Regulatory Commission, if Shuanglu cannot turn back into black in its interim report, it will be forced to delist.
Many worry that Whitecat will lose the shell before it receives benefits.
Hou said he is confident that Shuanglu will earn profits by the end of June.
Before the assets reorganization, Shuanglu had paid off its debt, totalling 550 million yuan (US$66.4 million), through help from Huarong Assets Management Company, Whitecat Group and Shanghai Light Industrial Group.
Before the end of June, Shuanglu will transfer its legal person share to other companies, thus producing a revenue of 20 million yuan (US$2.4 million).
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