Harbin CEO backs $750 million buyout offer, shares rise

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BANGALORE (Global Markets) - Chinese electric motor maker Harbin Electric Inc (HRBN.O) said its chief executive and Abax Global Capital had reaffirmed their offer to take the company private for $750 million, after a research firm raised doubts about the deal going through.

Shares of the company rose 10 percent to a high of $17 on Friday on Nasdaq, but were still much below the offer price of $24 a share, indicating investor skepticism.

CEO Tianfu Yang made the offer in last October but is yet to make a formal bid.

The recent stream of bad news involving Chinese companies listed on U.S. exchanges could also be weighing on Harbin's stock, which has dropped 38 percent since the offer.

Shares of several U.S.-listed Chinese companies, including Longtop Financial Technologies (LFT.N) and China Electric Motor Inc (CELM.O), were hammered over issues ranging from regulatory probes to potential accounting frauds.

Harbin's statement comes a day after Citron Research raised doubts about a $400 million credit agreement between Yang and China Development Bank to finance the buyout.

Citron said the agreement, revealed by Harbin earlier on Thursday, did not mention anything about a collateral for the credit facility and that the loan depended on personal guarantees.

However, Maxim Group's analyst Echo He said the agreement was a significant step forward for the leveraged buyout.

"We have learned that the loan is collateralized by Harbin's entire asset or equity ownership," analyst He said in a note.

Yang, Abax and their respective affiliates collectively own about 40.72 percent of Harbin's shares.

CEO Yang had first made the offer to take the company private with Baring Private Equity Partners.

Soon after, Baring backed out as a buyout partner and said it would help with the financing, and this May, Yang teamed up with Abax Global Capital.

Harbin said a special committee of its board has been formed to evaluate the proposal.

High-growth U.S.-listed Chinese companies have been exploring the option of going private and relisting in Asia to get better valuations.

Harbin shares were trading up 5 percent at $16.29.

(Reporting by Divya Sharma in Bangalore; Editing by Don Sebastian and Saumyadeb Chakrabarty)