Yuanxi Zhang
Long/short equity, value, special situations

WSP Holdings Will Reward Short Sellers Soon

Recommendation: Short WSP Holdings (NYSE: WH)

Catalysts: NYSE Delisting; termination of merger agreement after August 21; failure to obtain waivers for credit facilities from the bank

6-Month Target Price: $1.5 or less


WSP Holdings (NYSE:WH) is likely to terminate the merger agreement within a month. Judging by the current prices, investors seem to be confident that the deal will not fall through. However, the stock follows the exact trajectory that China Advanced Construction Material (NASDAQ:CADC) took a year ago before CADC cancelled the going-private deal. Furthermore, the company has been in breach of the debt covenants since June 2012 and whether the company is a going concern remains a question. Last but not...

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