Mustek bids farewell to Taiwan bourse

JSE-listed Mustek is delisting from the Taiwan Stock Exchange (TSE), after almost a decade, after the bourse revised its standards for the minimum number of Taiwan Depository Receipts (TDRs).

Mustek was founded by CEO David Kan in 1987 and listed on the JSE in 1997 and on the TSE in 2003. The PC supplier says the last day to trade TDRs will be 27 August and then its 1.9 million receipts will be delisted, although this will not affect stock on the JSE.

FD Neels Coetzee says Mustek, which does not sell any products in Taiwan, initially listed to gain access to foreign capital markets. It also wanted to take advantage of the potential to improve its market rating, as similar companies listed on the TSE traded at considerably higher multiples than South African firms. It also saw the listing as an opportunity to increase its international visibility and brand recognition, and as a mechanism for raising capital in international markets.

Mustek raised capital in 2003 when it listed 20 million receipts, says Coetzee.

In a statement, Mustek says the Taiwan bourse's new rules stipulate that if, for three consecutive months, the number of outstanding TDRs has been less than 10 million, or the market value of the TDRs is less than NT$300 million - R81.7 million - and companies do not issue more units within three months, the bourse can delist the receipts.

Coetzee says the bourse changed its rules about two years ago, but the number of Mustek's TDRs only recently dropped below the required 10 million units.

Mustek's board considered various factors before deciding to delist, it says. These included costs associated with the listing such as listing fees, translation costs, publication costs, audit fees and printing costs. It also pondered the liquidity of the receipts, the current share price and the potential for dilution if more TDRs were issued.

Coetzee says the real cost “lies in the amount of time and effort spent to comply with the TSE's listings requirements”.

The distributor adds that it took into account the potential impact the delisting might have on the company's reputation, and the fact that it will be able to publish its results sooner as no translation will be required.

Coetzee explains that, to comply with the TSE's listing requirements, all publications that were done in SA had to be translated into Chinese and converted into NT$ and published simultaneously in Taiwan. “Therefore, our financial results were transparent to our suppliers in Taiwan.”