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Harbin Electric (NASDAQ:HRBN) and its chief executive officer Tianfu Yang are going to have to find another bride since they have just been left at the altar.

Baring Private Equity Asia Group Ltd., the PE fund willing to slap down $750-million to partner up with Harbin, is now an erstwhile suitor according to a filing made last last night. The language is convoluted and seems to have been written to save face, mentioning as it does Yang’s openness to having Barings contribute up to 10% of a future management buyout if it wants to. Still, the thrust is clear enough: Baring’s has backed out and will not be participating in the deal.

There is an allusion to alternative financing “being in place” upon completion of the deal but few specifics. The separation appears mutual and, unlike busted American deals, there does not appear to be any litigation pending.

The PE fund may or may not back Yang in some future limited capacity but when it came to committing about 50% of its newly raised $1.5-billion, they walked away. Indeed, it will be difficult for even the most ardent Harbin bull to avoid the fact that there was no reduced price or counter-bid. Baring’s, in other words, was interested at $24 but not at a lower price. With full access to Harbin’s financials and operations, they walked rather than bid $20 or $17. The SEC filing is mum on what they saw. It almost certainly closes the door on the likelihood that another high-profile PE fund will back Yang and Harbin.

Yesterday, the stock shot up 95 cents to $17.90 on the news that the Bank of China is providing a $35-million working capital loan, the majority of which was to be used to pay off a 10%, five-month loan from Abax Capital. Interestingly, the Bank of China is Abax’s primary investor.

It has been a rough week for Harbin investors who saw their share holdings decline in value more than 11% on Friday alone. In conjunction with a series of FI.com reports that raised concerns over the company’s financials and the cast-of-characters affiliated with its founding, the Muddy Waters Research shop (which presumably had a short position) released a devastating report on RINO. On Friday, management released an 8-K for the ages in which it confirmed both the scope of the fraud and the suspicion that they were not very engaged with operations.

It would appear that the rough times for Harbin Investors are just beginning.

Disclosure: None

Source: Harbin Electric Loses Its Private-Equity Suitor; What Now?