ST Xinchao encounters a "problematic buyer", and the compliance of Huineng Haitou's "high premium" acquisition is questioned
2024-08-27
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Fengkou Financial Reporter Zhao Chong
ST Xinchao, which has been plagued by internal strife, may welcome a new actual controller. The olive branch is extended by none other than Inner Mongolia's "coal tycoon" Guo Jinshu and the Huineng Holding Group Co., Ltd. (hereinafter referred to as "Huineng Haito"), which he controls.
On the evening of August 23, ST Xinchao, an A-share listed company, issued an announcement stating that the company had received a summary of the tender offer report from Huineng Haitou. Huineng Haitou intends to make a tender offer to acquire 3,128,228,100 shares of ST Xinchao at a price of RMB 3.10 per share, accounting for 46.00% of the total share capital of the listed company. The maximum total amount of funds required for the acquisition is RMB 9,697,507,110. However, shortly after the announcement was released, ST Xinchao disclosed possible illegal and irregular behaviors of Huineng Haitou, including failure to truthfully report and disclose the persons acting in concert and the actual shareholding. The Shanghai Stock Exchange immediately issued a regulatory work letter to ST Xinchao, requiring the company and Huineng Haitou to verify and explain the specific circumstances item by item in accordance with the relevant provisions of the "Administrative Measures for Acquisition of Listed Companies".
The reporter noticed that Huineng Haitou offered a relatively high premium for this tender offer, which was over 68% compared to the closing price of ST Xinchao of 1.84 yuan per share on August 22.
The move by Huineng Haitou is intended to gain control of ST Xinchao. The announcement shows that before launching the tender offer, Huineng Haitou already held 4.99% of ST Xinchao's equity. If this tender offer is completed, its direct shareholding ratio will reach 50.99%.
At present, ST Xinchao is in a "ownerless" state. According to the first quarter report, the company's largest shareholder currently holds only 6.39% of the shares, and the top ten shareholders hold a total of 38.28%. In April this year, the company's stock was also issued other risk warnings because the accounting firm issued a negative opinion on the company's "Internal Control Audit Report".
It is reported that the legal representative of Huineng Group is Guo Jinshu, who is known as the "coal king" of Inner Mongolia. The group was established in 2001. It is a large-scale joint-stock private enterprise with coal, electricity and chemical industry as its main industries, new energy, new materials and modern coal chemical industry as its new development direction, and integrating logistics, finance, real estate, roads and bridges, water affairs and other industries.
It is worth noting that according to public information on the Internet, Guo Jinshu is suspected of being involved in a major corruption case involving former Ordos Vice Mayor Li Shirong, former Deputy Director of the Municipal Public Security Bureau Liu Jie and others. He is suspected of major criminal offenses such as bribery, and is involved in illegal and irregular activities such as embezzlement of state-owned assets during enterprise restructuring. The website of the Central Commission for Discipline Inspection has made special reports on such behavior.
According to Article 6 of the Measures for the Administration of Acquisition of Listed Companies, the acquirer shall have certain subject qualifications and shall not be in any of the circumstances that prohibit the acquisition of listed companies as stipulated in Article 83 of the Measures. Article 83 clearly stipulates a variety of circumstances that prohibit the acquisition of listed companies, including the acquirer has a large amount of debt, which has not been repaid when due and is in a continuous state; the acquirer has committed major illegal acts or is suspected of major illegal acts in the past three years. If Huineng Haitou has indeed failed to truthfully disclose the relationship of persons acting in concert, its acquisition behavior not only violates the requirements of the Measures for the Administration of Acquisition of Listed Companies, but may also touch upon the provisions of the Securities Law and other relevant laws and regulations.
ST Xinchao said that the company's board of directors has begun to investigate and verify Huineng Haitou's subject qualifications, credit status and acquisition intentions in accordance with Article 32 of the "Management Measures for Acquisition of Listed Companies". The latter informed the company via email on the evening of August 22 that "except for the disclosed situation, there is no other person acting in concert holding the equity of your company."
"Based on Article 6, Article 13, Article 76 and other provisions of the "Management Measures for Acquisition of Listed Companies", the company has reasonable doubts and major concerns about Huineng Haito's tender offer. There is a certain degree of uncertainty as to whether this tender offer can continue to move forward, and the risk of this tender offer being ordered to be suspended or stopped in accordance with the law cannot be ruled out." ST Xinchao said.
ST Xinchao consulted with a US lawyer on this tender offer. The lawyer believes that the Committee on Foreign Investment in the United States (CFIUS) has the right to review this transaction, and the company must proactively report this tender offer and related changes to the CFIUS in advance and obtain its approval, otherwise the company's existing business in the United States will be significantly affected. There is still considerable uncertainty in the review process and conclusion of the CFIUS.
If the situation reported by Shandong Xinchao is true, it means that the various suspected illegal actions of Huineng Haito have not only increased the complexity and risk of the acquisition, but also cast doubt on the legality of this tender offer.
