Focus Media denies fresh Muddy Waters allegations

Stock Market Predictions

(Global Markets) - Chinese advertising company Focus Media Holding Ltd (FMCN.O) denied shortseller Muddy Waters LLC's allegations of irregularities in its acquisition of a ginseng plantation.

The Carson Block-led firm said Focus Media's purchase of Hunchun Shengtai Ginseng Plantation Co Ltd was "not kosher" and questioned the purpose of the acquisition.

The ginseng plantation in Jilin Province in northeast China "seems to have no operations," Muddy Waters wrote in a note.

Focus Media said there were no improprieties involved in the transaction, which was aimed at gaining some tax benefits.

The company will release additional information about the deal on January 9.

In November, Muddy Waters began coverage of Focus Media with a "strong sell" rating, saying the Shanghai-based firm had inflated the number of its LCD advertising display screens.

The company had denied the allegations saying the short seller was misrepresenting information.

Short-sellers -- who borrow stocks and then sell them in the hope they can later buy them back for less -- have targeted Chinese companies listed in North America, alleging fraud and mismanagement, and wiping out billions of dollars of shareholder value.

U.S.-listed shares of Focus Media closed down 5 percent at $18.63 on Friday afternoon on the Nasdaq. The stock has fallen 27 percent since Muddy Waters' first leveled allegations against the company.

(Reporting by Soham Chatterjee in Bangalore; Editing by Joyjeet Das)