The New York Stock Exchange said it planned to delist the Chinese online home platform Danke for failing to report its financial results in a timely fashion and for failing to respond to repeated requests from the American bourse’s regulatory arm.
The property company, formally known as Phoenix Tree Holdings with a business model similar to WeWork, has not reported its financial results since the first quarter of 2020 when it posted a net loss of 1.23 billion yuan (US$188 million). Founded in 2015, Danke reported full-year losses in the previous three years.
“The company has not provided information requested by NYSE Regulation in February and March 2021,” the NYSE said in an April 6 statement. “Separately, it has also come to the attention of NYSE Regulation that the company has failed to make timely, adequate, and accurate disclosures of information to its shareholders and the investing public.”
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Shares of the company, which traded in New York under the Phoenix Tree name using the mnemonic DNK, had been suspended since March 15 pending the delisting, NYSE said. The stock had lost 75 per cent of value in the past 12 months, plunging 82 per cent since its initial public offering in January 2020. Danke did not immediately respond to a request for comment on Wednesday.
The Beijing-based company faced questions about its financial viability after claims in November that it pocketed upfront payments from tenants and failed to pay landlords, leading to a series of evictions and harsh criticism in state media.
Danke faced additional scrutiny after the December 3 death of a 20-year-old graduate student who fell from a 18th floor flat he rented in Guangzhou and stopped listings on its home rental referral app in China in late December.
The delisting move comes just over a year after Danke raised US$130 million in an initial public offering in New York in January 2020 and as US-listed Chinese companies are facing increased scrutiny by American authorities.
The US Securities and Exchange Commission (SEC) began taking steps in March to implement a law that would force Chinese companies and other foreign firms to delist from American bourses if they fail to allow an accounting watchdog to review their audit working papers. China has refused to allow such reviews for years, citing national security concerns.
The move could force New York-listed Chinese tech giants to make a tough decision on whether to abandon their US listings. A number of tech leaders, including Alibaba Group Holding, JD.com and Baidu, sought secondary listings in Hong Kong in the past 16 months, in part as a hedge against heightened Sino-US tensions. Alibaba is the parent of South China Morning Post.
At the same time, an executive order signed in the waning days of the Trump administration led to the delisting of three of China’s biggest telecommunications companies and CNOOC Limited, a unit of China National Offshore Oil Corporation (CNOOC), over purported ties to the Chinese military.
American investors, including pension funds and university endowments, have until November 11 of this year to fully divest their holdings in any designated Chinese military companies following the executive order, which former US President Donald Trump signed in November 2020.
US President Joe Biden’s administration put a stay in place in January on some of the targeted entities, delaying until May 27 a ban on American investments in companies that have similar names to the blacklisted Chinese firms. That ban was set to go into place on January 29.
The Biden administration is undertaking “complex reviews” of various Trump policies towards China, White House press secretary Jen Psaki said at the time.
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