Trading in Jimmy Lai's firm Next Digital halted

Next Digital Ltd shares were suspended on Monday after authorities froze assets of its jailed owner Jimmy Lai under a new national security law in Hong Kong, while the tycoon pleaded guilty to organizing in an illegal protest in October 2019.

The shares on the Hong Kong bourse will stay suspended ahead of an announcement by the company about the frozen assets, including Lai’s majority stake in the media publisher.

Next Digital CEO, however, has sought to allay investor concerns saying the frozen assets have no link with the company’s bank accounts.

Freezing Lai’s assets was an important measure aimed at preventing more crimes, Secretary for Security John Lee said, declining to give more details citing ongoing legal procedures.

“It is illegal activities we are dealing with, not press work,” the Hong Kong official told reporters.

Lai, 73, was sentenced to 14 months in prison for taking part in unauthorized assemblies during anti-government protests in Hong Kong in 2019, and is among the most high profile arrests made under the security law. He faces three charges under the new law, including collusion with a foreign country.

Lai and nine other activists pleaded guilty in the District Court to charges of organizing an unauthorized assembly on October 1, 2019, China’s national day, as a trial began on Monday.

Lai’s guilty plea was widely expected after a similar plea in his previous illegal assembly trial. Sentencing is likely on May 28.

Lai has a 71.26 percent stake in Next Digital worth around HK$350 million (US$45 million) based on Friday’s closing share price. But the freezing of Lai’s assets will not affect the company operations as 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 popular tabloid Apple Daily.

Without fresh cash injections, Next Digital can only survive another nine or 10 months, Apple Daily cautioned on Saturday.

A shareholder’s loan of HK$756 million, of which HK$500 million had been drawn as of end-September, was an “important source of funding” and may not be available anymore given the freeze, the paper added.

At the time, the group’s bank borrowings amounted to HK$262.3 million, repayable within three years and its net cash position was HK$228.7 million.

The paper reported on Friday its Taiwan arm would stop publishing its print version.