World’s largest rubber glove maker’s products were banned by the US on concerns of forced and bonded labour, Reuters said.
Top Glove Corporation’s plan to list in Hong Kong and raise up to $1bn has been delayed as the world’s largest rubber glove maker seeks to resolve a US import ban on its products, sources with direct knowledge of the matter said.
The Malaysian firm, which is already listed in Kuala Lumpur and Singapore, flagged in late April that it would sell 793.5 million shares in the listing, half what the company proposed in its application to the Hong Kong Stock Exchange in February.
However, the deal has stalled as the company awaits indications from US Customs and Border Protection (CBP) on whether an imports ban would be lifted any time soon, the sources told Reuters.
Potential investors questioned Top Glove and its advisers on the sanctions during preliminary briefings ahead of the listing, they said.
Top Glove had hoped to complete the listing by the end of the second quarter in 2021, the sources said.
Top Glove did not respond to a request for comment. The sources could not be named as the information was not yet made public.
US Customs and Border Protection (CBP) prohibited the import of Top Glove products last year, saying it had found reasonable evidence indicative of forced labour practices at the company’s production facilities across Malaysia.
Customs said in March it had found evidence of multiple forced labour indicators in Top Glove’s production process, including debt bondage, excessive overtime, abusive working and living conditions, and retention of identity documents, and directed its officials to seize goods from the manufacturer.
The North American market accounts for 22 percent of Top Glove’s total sales volume, according to its latest accounts.
Analysts had largely kept their earnings forecasts for the company intact and said diversion of trade to other markets could cushion the impact of sales loss in the US market as the pandemic continued.
CBP, in an emailed response to Reuters, said the length of the review process varies with the individual facts and circumstances of each case.
“CBP will not modify or revoke a Forced Labor Finding until it has information that all indicators of forced labor identified by the agency have been fully remediated and it is demonstrated that forced labor is no longer being used to produce the goods targeted,” it said.
Top Glove said in April it had resolved all indicators of forced labour in its operations and that this had been verified by the London-based ethical trade consultant Impactt Limited.
The company has said a Hong Kong listing is not urgent as it has 2.36 billion ringgit ($573.09m) cash on its balance sheet, the sources said.
Instead, a listing is being pursued to diversify the firm’s shareholder base and take advantage of the increased liquidity in Hong Kong’s markets compared with Kuala Lumpur and Singapore, one of the sources added.