Hong Kong IPO candidate Tianqi Lithium gets Shenzhen bourse query over losses incurred from US$159 million option-linked contracts with Morgan Stanley
- Shenzhen exchange asks Tianqi to ‘clarify the reason and justification for the losses incurred by your hedging business over the past three years’
- The Sichuan province-based lithium miner applied to list in Hong Kong in January in a deal that could raise more than US$1 billion
Tianqi Lithium, Asia’s second-largest lithium compound producer, has received queries from the Shenzhen Stock Exchange about a 49.7 million yuan (US$7.4 million) derivative loss linked to US$159 million option-linked loan contracts it obtained from US bank Morgan Stanley in 2019.
The bourse has asked Tianqi’s accountant to submit further details and explain the overall hedging losses disclosed by the company’s 2021 annual report. It has also asked the firm to further justify the losses it has sustained from its hedging business.
“Please clarify the reason and justification for the losses incurred by your hedging business over the past three years,” the exchange said in an inquiry letter published on its website on Monday. It also asked Tianqi to demonstrate whether its employees had “engaged in high-risk futures investment” without complying with the firm’s internal risk limits.
Tianqi did not issue a statement regarding the inquiry.
Xingyong Zhonghe Accounting Firm, which is listed as Tianqi’s accountant for its 2021 annual report, was not immediately available for comment on Tuesday.
