Will The "ST" Modern Avenue Get Cold?

In January 10th, the announcement of the modern Avenue announced that because the controlling shareholder of the company violated the prescribed procedures and provided guarantee for the company and its subsidiaries in the name of foreign investors, the company's stock would touch other risk warning cases. Since January 13th, the company's stock trading will be subject to other risk warnings, and the company's shares will be changed from "modern Avenue" to "ST modern" for short. As a matter of fact, since September 2019, there has been a lot of negative news on modern Boulevard. Now it has become the first "cap cap" in the A share market in 2020. Is this high-end men's clothing listed company getting cold?

Before the risk warning, the modern Avenue announced the announcement of the company's new litigation and new discovery of external guarantees. Notice shows that the company recently received the Guangzhou intermediate people's court "summons" and "civil complaint" and other legal documents, the company's real controller Lin Yongfei and plaintiff Zhou Zhicong dispute over the existence of a loan, was sued. At the same time, the company found Lin Yongfei and the plaintiff between the existence of a violation of security matters, involving an amount of 150 million yuan.

It is noteworthy that in January 8th, Wang Kanggai, former representative of modern securities in morden Avenue, applied for resignation. The company said it would appoint qualified personnel as a representative of securities affairs as soon as possible. In the industry view, Wang Kanggai's resignation seems to be more abrupt, the reason is worth pondering.

In fact, this is not the guarantee for shareholders of the first company in modern Boulevard. In April 9, 2018, Cafu, a modern Boulevard subsidiary, even provided a guarantee of 105 million 700 thousand yuan for the controlling shareholder of Guangzhou Garden Development Co., Ltd. (hereinafter referred to as the garden company). After that, it secured a guarantee of 80 million yuan for the controlling shareholder, the Guangzhou Tianhe Lijia small Loan Company Limited, which is the affiliated party of Guangzhou. In December 20th of the same year, even Cafu offered $100 million guarantee for the garden company in Guangzhou. The 150 million yuan dispute between Lin Yongfei and Zhou Zhicong occurred in January 18, 2019.

Up to now, in addition to the first violation of security has been lifted, the remaining three disputes on the modern Avenue will continue to "headache." For this reason, the guarantee balance of the company which has not been considered and not disclosed in time is 330 million yuan (excluding interest and other expenses), accounting for 13.86% of the audited net assets of the company in the latest year.

The above four guarantees were the personal ultra vires acting by the then chairman and the then legal representative Lin Yongfei, who had signed the contract in the name of the company without the approval of the modern Avenue board and the general meeting of shareholders. After the exposure, Lin Yongfei chose to cut with the modern Avenue and quit the position of chairman of the board.

An expert in economic management said in an interview with the China Commercial Daily reporter that the violation of warranty on modern Avenue is a mistake in internal management, which is very risky for listed companies. Although the follow up modern Avenue has opened new corporate seals, corporate chapters and financial charter, to strengthen the company's official seal management, but the previous disaster is difficult to solve. In terms of the company's current development and performance, it is difficult for modern avenue to repay debts and solve the liability of guarantee. It may be difficult to remove the "ST" hat in a long time.