China Rapid Finance Announces Business Changes, Non-compliance; Stock Tanks 37%

The microcredit company announced it has six months to regain compliance with the listing requirements after its business took a hit last year.

Author: Anna Vodopyanova   

Shares in China Rapid Finance Ltd. (NYSE: XRF) tanked more than 37 percent Friday, to 42 cents apiece, after the company said it is unable to maintain compliance with the stock market's regulatory listing requirements and its business continues to face headwinds in China's lending industry.

The Shanghai-based lending marketplace announced in a statement today that it will not file its annual financial statement in a timely manner, as required by the New York Stock Exchange. It is also not in compliance with the market's listing standards in terms of maintaining the minimum average share price, it said.

XRF said it was forced to change its business practices in China to comply with the new regulations in the peer-to-peer lending industry. The changes included reducing outstanding loan balances, the number of lenders, and the number of borrowers, which adversely affected its business. 

The company said it is also transitioning its repayment structure to a monthly payment plan from a "full redemption when due." Further, it has set up an exchange for XRF investors who prefer to sell their loans, though the company provides no guarantees of success.

"The Company will continue to operate its marketplace lending platform and will concentrate on institutions as the primary funding source," XRF stated. "The Company has also significantly downsized all parts of its operations relating to retail marketplace lending, other than collections."

XRF said it plans to focus in its microcredit line of business, as well as sell its analysis software to banks and credit companies. It added that it is looking for opportunities for fundraising.

The company will have six months from the required due date of the annual financial report to comply with the NYSE listing standards. If XRF fails to regain compliance during this period, it may face delisting from the stock market.

China Rapid said it intends to cure the stock price deficiency and regain compliance with the NYSE within the allowed time frame.