The controversial sale of Boto International's core business for HK$1.06 billion in August prompted some commentators to ask whether the firm should be treated as a cash company and should therefore be delisted.
The cash company question popped up again last week after toy manufacturer Rockapetta Holdings proposed the disposal of its core business to two independent investors for $25 million in cash.
Rockapetta said it would use about $2.22 million to acquire a wines and spirits distribution business from substantial shareholder Peter Lim Eng-hock and other parties.
There is no strict definition but a cash company is usually taken to mean one which has no concrete principal business but is sitting on a pile of money.
Rockapetta probably has a better case than Boto because the old toy business has suffered from significant losses for three consecutive years, while the new business is making a profit.
Between April 1999 and June this year, the toy business bled about $96 million. The targeted wine and spirit business on the other hand recorded a pre-tax profit of $71,000 for the 15-month period to March 31.
