Next Digital actions stopped, jailed owner Lai pleads guilty to illegal assembly in Hong Kong
Shares of Next Digital Ltd (0282.HK) were suspended Monday after authorities froze the assets of its jailed owner Jimmy Lai under a new national security law in Hong Kong, while the mogul pleaded guilty of taking part in an illegal demonstration in October 2019.
Shares will remain on hold until the company announces frozen assets, including Lai’s controlling stake in the pro-democracy media publisher, Next Digital said.
The ruling against the Lai’s assets has further raised concerns about media freedom and the future of Next Digital, which Lai is keeping afloat with loans. The CEO of Next Digital, however, tried to allay investor concerns, saying the frozen assets were unrelated to the company’s bank accounts.
Given that this is the first time that a listed company has come under the new security law imposed by China in 2020, it is also fueling concerns about the wider investment environment in the Asian financial hub. Read more
Freezing Lai’s assets was an important move to prevent more crime, Security Secretary John Lee said, declining to give more details citing pending legal proceedings.
“These are illegal activities that we are facing, not press work,” the Hong Kong official told reporters.
Lai, a democracy activist and fervent Beijing critic, was sentenced to 14 months in prison for participating in unauthorized rallies during anti-government protests in Hong Kong in 2019, and is among the most high-profile arrests under the security law. He faces three alleged charges under the new law, including collusion with a foreign country. Read more
Lai and nine other activists pleaded guilty in the district court to holding an unauthorized assembly on October 1, 2019, the Chinese National Day, as a trial began on Monday.
Lai’s guilty plea was widely anticipated after a similar plea in her previous illegal assembly trial.
Sentencing is expected on May 28.
Lai owns a 71.26% stake in Next Digital worth approximately HK $ 350 million ($ 45 million) based on Friday’s closing share price.
But freezing Lai’s assets will not affect the company’s operations because the frozen assets have nothing to do with Next Digital’s bank accounts, CEO Cheung Kim-hung told the Apple Daily newspaper.
Next Digital runs the influential pro-democracy tabloid Apple Daily.
A senior Apple Daily source told Reuters last week, ahead of the asset freeze announcement on Friday, that the group had tried to “firewall” its media operations against Lai’s other companies, but they thought that the authorities still had paper resources, without elaborating.
“It’s just a matter of whether they want to do it. If they want to move (on us), they will move,” the source said.
Without further injections of cash, Next Digital can only survive nine or 10 months, Apple Daily warned on Saturday.
A shareholder loan of HK $ 756 million, of which HK $ 500 million had been drawn by the end of September, was a “significant source of funding” and may no longer be available given the freeze, he said. added the log.
At the time, the group’s bank loans stood at HK $ 262.3 million, repayable within three years, and its net cash position was HK $ 228.7 million.
The newspaper reported on Friday that its Taiwanese subsidiary would stop publishing its print version due to declining advertising revenue and politically-related difficult business conditions in Hong Kong. He said the “pro-Chinese forces” in Hong Kong were boycotting various advertising resources. Read more
Authorities say media freedom is intact, but warn national security is a red line.
Officials criticized Apple Daily’s coverage and pointed to the introduction of “fake news” legislation.
“I just hope you know that our friends on the outside can resist the continued oppression we are witnessing in Hong Kong, especially with the media,” said Avery Ng, one of 10 defendants in the Monday’s illegal assembly trial, before going to court.
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