(Yicai Global) Nov. 29 -- Anhui Xinli Finance’s shares rose by the daily trading limit for a third straight trading day after announcing a plan to acquire BAK Power, but the financial services company warned that the deal may yet be halted because of issues at the lithium-ion battery maker.

Xinli Finance [SHA: 600318] ended 10 percent higher today at CNY12.20 (USD1.90). The stock had already surged 40 percent from late October to Nov. 10 before news of the BAK Power deal, prompting concerns about insider trading.

Xinli Finance announced a plan on Nov. 25 to buy 75.6 percent of BAK Power via a major asset swap and new share issue. The Hefei-based company did not disclose the deal’s value.

It could yet be halted or even canceled since the parties to the deal may not be able to reach an agreement on BAK Power’s valuation and the freeing up of frozen shares, Xinli Finance said after the close of trading today. BAK Power also faces losses and litigation, as well as the impact of economic changes, so its performance may worsen, the statement added.

The Shanghai Stock Exchange has asked Xinli Finance to explain BAK Power’s profitability, debt litigation, and insider information issues, as well its strengths and weaknesses compared with major rivals.

BAK Power, set up in 2005, had a net loss of CNY1 billion (USD156.7 million) last year and lost CNY17.1 million in the first nine months of this year. It also faces many unresolved lawsuits by customers, suppliers and shareholders. The firm defaulted on payment to several lithium battery materials suppliers in 2019, as major clients Zotye Automobile and Hawtai Motor failed to make payments.

Editor: Tom Litting