A Fixed Increase Triggering 4 Billion Debt Crisis? The Rescue Of Dafu Technology Controlling Shareholder

In December 11th, 300134.SZ, the controlling shareholder of Anhui Fortune Technology Group (hereinafter referred to as the "day to day investment"), signed a framework agreement on cooperation with Shenzhen, China's XinDa (hereinafter referred to as "XinDa Shenzhen") and Bengbu related government investment platform (hereinafter referred to as "framework agreement"). The transaction mainly consists of two parts: debt acquisition, debt restructuring and fund investment. The total amount of transactions is not more than 6 billion yuan.

This also means that after a year and a half, it is expected that the company's investment will solve nearly 4 billion of the debt problem while maintaining the right of technology control.

Since last year, the case of large shareholders' equity pledge crisis has not been uncommon, and many listed companies have transferred control rights in the process of bail outs. This scheme has aroused concern for the innovative design of the controlling shareholder's relief and the first local government + financial institutions (AMC) + industrial capital + Private Equity Fund under the circumstances of no control transfer.

After a year and a half, the company's investment is expected to solve nearly 4 billion of the debt problem while maintaining the right of technology control. - Song Wenhui diagram

Crisis tracing

When signing the agreement, the founder, chairman and real manager of Dafu technology did not realize that this is the beginning of a series of troubles. Up to now, it has a 51.96% stake in Dafu technology.

From the financial data, we can see that the performance of Dafu has obvious volatility, for example, in 2014, operating profit surged by 1454.38% over the same period last year, and operating profit decreased by 2196.58% in 2017. These fluctuations are also related to the wave of infrastructure in the mobile communication industry.

"The logic of the capital market is expected to grow by more than 50% per year, but this is hard to achieve in the reality of our industry, and the industry is cyclical." Sun Shangchuan said frankly.

Dafu technology is in the mobile communication industry. The filter we make is a core component of the mobile communication base station. The mobile communication base station is an investment in infrastructure. The periodicity is obvious. For example, when the 5G licence reaches its peak, it will drop to the trough, and then there will be an obvious cycle to 6G. From 2016 to 2017, when 4G turned to 5G, our peers were also losing money. Sun Shangchuan explained.

In 2017, Dafu science and technology, Wuhan fan Valley and Chun Hing Seiko all three suppliers reached the main supplier of HUAWEI RF filter 80%, all reported huge losses.

In 2016, Dafu technology has been on the market for 6 years, and almost all the funds have been used. In the face of the industry's cold cycle, it began to "raise money for the winter".

In September 2016, according to the price of 30.63 yuan / share, Dafu technology to Bengbu city investment, Zhejiang silver capital, Golden Eagle Fund, Huaan future, North letter Ruifeng 5 institutions non-public offering not more than 120 million new shares, net proceeds of not more than 3 billion 450 million yuan. After the fixed increase, the total assets and net assets per share were increased, and the asset liability ratio decreased from 45.63% to about 24.61%.

Sun Shangchuan did not think that this money is still largely on the list of listed companies, and the signing agreement of the controlling shareholders has triggered his debt crisis.

It is understood that 5 institutions in addition to the Bengbu city investment, the other 4 are just crossing the bridge, the real subscription of the rich technology to increase the shares are Hangzhou extension, Shenzhen Yintai, Zhejiang Merchants Holdings and other 7 Party investors.

At the same time, in addition to the private placement, sun also passed the pledge agreement with the 7 Parties through the 98.33% day allocation of its shares, which is "principal + annualized yield 6%" or "principal + annualized yield 8%".

"At that time, I didn't think much about it. They said it was a practice to sign this. No problem, I signed it." Sun Shangchuan recalled to reporters.

"At that time, it was not very urgent to need these about 3000000000. Actually, we did not carry on the cotton padded jacket. We carried a piece of iron on the back, not only could not accompany us to spend the winter, but also added tremendous pressure to us." He sighed with emotion.

Shortly after the completion of the issuance, along with the industry's cold cycle and the downtrend of the gem, the shares of Dafu also fell after the concussion.

The capital market and the whole macro-economy have entered the credit tightening cycle.

In the face of the fall in share prices, the fixed number of shareholders began to sit still. If the agreement had not yet expired, they could find sun Shang Zun, who wanted to cash the guarantee agreement and compensate the principal and interest.

At that time, besides bank loans and stock pledge, sun did not have any other effective source of funds. In the past 10 years since the listing, sun has not yet reduced its stock price. It has always used stock pledge financing and short debts, which are almost always used for long-term industrial investment, such as robots, CNC machines and so on.

In 2017, sun Shang Zai compensated 6 hundred million of the stock pledge to the shareholders.

In 2018, along with the fall of the entire A share, dafi technology share price is still in the downstream channel.

In May 10, 2018, on the premise of the payment of the day's investment, Hangzhou's extension still applied for the property preservation through the Shenzhen international arbitration court to the Shenzhen intermediate people's court. In May 14, 2018, the Shenzhen intermediate people's court made a ruling and froze the fortune 182 million shares held by the day's investment. According to Dafu technology's closing price of 13.44 yuan / share in May 14, 2018, the market value of these frozen shares is as high as 2 billion 447 million yuan.

Prior to participating in the fixed increase, Hangzhou extended a total of 690 million yuan invested, holding 22 million 530 thousand shares.

The stock price continued to fall under the freezing, aggravating the panic of other creditors, and also started the "run" and non-stop lawsuits against the day's investment. In the end, the debt crisis broke out due to the default of the day's investment due to a fall in share prices.

Bomb disposal plan

The case of stock market pledge in the capital market in 2018 is a rare case. And to some companies, the process of bail outs is accompanied by the "letting go" of real controlling shareholders and large shareholders. It is not easy to introduce capital to solve the liquidity problem of large shareholders while maintaining the stability of listed companies' control rights.

In twenty-first Century, the economic report reporter learned that Dafu had already contacted several schemes of many institutions before, but it was finally unable to maintain nearly 4 billion of its debts due to insufficient funds and difficult to maintain the stability of control.

Eventually, one and a half years later, the investment agreement between XinDa and Shenzhen and Bengbu related government investment platform signed a framework agreement in December 11th. The transaction mainly includes two parts: debt acquisition, debt restructuring and fund investment. The total amount does not exceed 6 billion yuan, of which the total contribution of XinDa is not more than 3 billion 900 million yuan, and the total investment of Bengbu does not exceed 2 billion 100 million yuan.

XinDa Shenzhen intends to buy the debt of the day with about 3 billion 400 million yuan. After the day's investment is obtained, it will discuss debt restructuring and debt repayment with its original creditors, and pledge the share holding of listed companies to XinDa Shenzhen. In terms of fund investment, the investment fund of XinDa related party of Shenzhen was established as a manager to set up a fund for the transaction, with a total scale of not more than 5 billion 102 million yuan. The investment of the trade wind and the wisdom cloud of heaven distribution as GP are not more than 1 million yuan, respectively; the XinDa as a priority LP, the amount of investment is not more than 500 million yuan; Bengbu's investment is inferior to the latter grade LP1, the amount of investment is not more than 2 billion 100 million yuan; Sun Shangchuan is inferior LP2, Li Hongli is inferior LP3, and its contribution is 99% yuan by the joint venture's 99% day equity investment.

"Finally, a SPV company directly controls the day to day investment and indirectly controls the technology of the rich, which solves the debt problem of the controlling shareholders and does not participate in the actual operation of the listed companies, thus maintaining the stability of the control rights." Sun Shangchuan said.

It is understood that, in order to avoid triggering the tender offer and further affecting the controlling shareholder's status, in order to ensure that the normal production and operation of the company is not affected, and to seek the understanding and support for the special way to invest in the rescue fund, Wang Yingchun, Secretary of the Bengbu Municipal Committee, went to the SFC to communicate. Taking into account the background of the rescue, the background of the enterprise and the trading background, the innovation without precedent in the scheme has been approved by the SFC and the Fund Association, which reflects the current importance of the supervision department for the bailout.

Reporters learned that in the process of promoting the program, the Bengbu municipal government has also given strong support. As a key enterprise in Bengbu, when the debt crisis broke out in 2018, the municipal Party committee and municipal government held a number of special meetings to repeatedly demonstrate the restructuring and assistance programs. During the same time, Wang Yingchun, Secretary of the Bengbu Municipal Committee, led many times to Shenzhen to discuss with the relevant personnel of the enterprises of the day of the day, such as Tian Tian investment and Dafu technology. The Bengbu municipal government has set up a leading group for debt restructuring of the "day ahead" investment, with a funding group and a negotiating team of creditors. It is responsible for coordinating loans and funds from banks and other financial institutions, and negotiating with creditors.

For the government to actively promote restructuring, Wang Yingchun said frankly, "if we do not bail out, not only will the great wealth be damaged in the mussel industry, but our city will face a huge loss of more than 10 billion investment in the early stage. Secondly, big rich is just a big shareholder in trouble. The fundamentals of enterprises are good. They have independent intellectual property rights and core competitiveness in many key areas of the advanced manufacturing industry. The products have broad market and are worth saving. Thirdly, the bail outs fully meet the requirements of supporting the real economy and supporting the development of manufacturing industry.

Specifically, the negotiation with creditors is a long process in terms of the promotion of the rescue plan. It is understood that there are dozens of creditors in the three days of equity investments, equity swapping, group exchangeable bonds and listed companies. "Over the past year, the government has coordinated negotiations with creditors on the one hand, and has taken some measures to carry out blood transfusion to Dafu on the one hand. The development of the rich industry has not been affected." Tang Chunyi, deputy head of the Bengbu high tech Zone and the creditor negotiation group, told the twenty-first Century economic news reporter.