China Merchants Securities Co.Ltd(600999) about
Yinyi Co.Ltd(000981) adjustment and ex right formula for conversion of restructured capital reserve into shares
Special comments
Shenzhen Stock Exchange:
On June 23, 2020, Ningbo intermediate people’s Court of Zhejiang Province (hereinafter referred to as “Ningbo intermediate people’s court”) made (2019) zhe 02 Po Shen No. 23 civil ruling according to law, ruled to accept the reorganization application of Yinyi Co.Ltd(000981) (hereinafter referred to as “Yinyi shares”), and made (2020) zhe 02 Po No. 4 decision on August 28, 2020, It is decided that the liquidation group of Yinyi enterprise shall formally perform the duties of manager (hereinafter referred to as “manager”). On December 11, 2020, the Yinyi Co.Ltd(000981) reorganization plan (hereinafter referred to as the “reorganization plan”) was adopted by the vote of the second creditors’ meeting and the investors’ group meeting of Yinyi shares. On December 14, 2020, Ningbo intermediate people’s Court issued the civil ruling (2020) zhe 02 Po No. 4, which ruled to approve the reorganization plan and terminate the reorganization procedure of Yinyi shares. As of December 23, 2021, the restructuring investors have paid a total investment of RMB 3.2 billion (including performance bond of RMB 153 million) to the manager’s account of the company. For details, see the announcement on the implementation progress of the company’s restructuring plan (Announcement No.: 2021-104) disclosed by the company on December 24, 2021.
According to the investor’s equity adjustment plan in the reorganization plan, taking the existing total share capital of Yinyi shares as the base, the capital reserve will be converted into shares according to the proportion of 6.48 shares per 10 shares. A total of 2.610 billion shares can be converted into shares. After the conversion, the total share capital of Yinyi shares will increase from 4.028 billion shares to 6.638 billion shares. After that, based on 6.638 billion shares, the capital reserve will be increased according to the proportion of 5.06 shares per 10 shares, with a total of about 3.359 billion shares. After the conversion, the total share capital of Yinyi shares will eventually increase to 9.997 billion shares (the exact number of shares converted will be subject to the number actually registered and confirmed by zhongdeng Shenzhen Branch).
Among the above converted shares, 1.431 billion converted shares shall be distributed to all shareholders except the controlling shareholders and their controlling shareholders. All the remaining converted shares will no longer be distributed to the original shareholders, and will be transferred and specially used to introduce restructuring investors and pay off liabilities in accordance with the provisions of the restructuring plan. See listed companies on
Announcement of the Yinyi Co.Ltd(000981) manager on the adjustment plan for the rights and interests of investors in the reorganization plan (Draft) disclosed on November 26, 2020.
According to the relevant provisions of article 4.4.2 of the trading rules of Shenzhen Stock Exchange (revised in March 2021): “the calculation formula of ex right (interest) reference price is:
Ex right (interest) reference price = [(previous closing price – cash dividend) + allotment price × Share change ratio] ÷ (1 + share change ratio).
If the securities issuer deems it necessary to adjust the above calculation formula, it may apply to the bourse for adjustment and explain the reasons. With the consent of the exchange, the securities issuer shall publish the calculation formula of the ex right (interest) reference price applicable to the ex right (interest) to the market. “
China Merchants Securities Co.Ltd(600999) (hereinafter referred to as “the independent financial adviser”) as the independent financial adviser of Yinyi shares, after careful research, it is considered that the calculation formula of ex right reference price should be adjusted in combination with the actual situation of the reorganization plan for the conversion of capital reserve into shares in the reorganization of Yinyi shares. The specific circumstances are as follows:
1、 Proposed adjustment to the calculation formula of ex right reference price
The company applies to adjust the calculation formula of ex right reference price to:
Ex right (interest) reference price = [(previous closing price – cash dividend) + consideration for shares 2 obtained by restructuring investors * Change proportion of shares 2 + consideration for shares obtained by creditors * Change proportion of shares] / (1 + change proportion of total shares). 1. Since cash dividend, stock dividend and allotment are not involved, the price of cash dividend and allotment in the formula is 0. 2. A total of 1.549 billion new shares (equivalent to 38.46% of the total shares of the original listed company, i.e. the share change ratio is 38.46%) are used to offset the company’s debt by paying off the debt with shares, and the consideration per share is RMB 3.96.
3. A total of 2.988 billion shares (equivalent to 74.19% of the total share capital of the original listed company, i.e. the share change ratio is 74.19%) were transferred to the restructuring investors. The restructuring investors transferred these shares on the condition of paying cash consideration, solving the remaining problems of the listed company and providing business development support to the listed company, and paid a total cash consideration of RMB 3.200 billion. Among the shares transferred and cash consideration paid by the above-mentioned investors, (1) in order to realize the investment of restructuring investors in Yinyi shares and properly solve the historical problems of capital occupation and cash dividend return, the restructuring investors will pay the price of about RMB 2.07814/share (the interest on capital occupation will be calculated until December 31, 2020, that is, the consideration for shares 1 obtained by the restructuring investors), 1.178 billion performance compensation shares available to the transferee controlling shareholders and their controlling shareholders are converted into shares (i.e. share 1 obtained by the restructuring investor, and the change proportion of share 1 obtained by the restructuring investor is 29.25%), The consideration from the transfer will be used to pay off the funds occupied by its controlling shareholders and related parties and the cash dividends that Ningbo Shengzhou Investment Co., Ltd. and Tibet Yinyi Investment Management Co., Ltd. should return to Yinyi shares in accordance with the provisions of the reorganization plan. Because this part of stock payment will not bring substantial improvement to the owner’s equity of the listed company, Therefore, it is not used as the calculation base of this ex right price; (2) Through the market bidding method of publicly selecting reorganization investors in judicial proceedings, the reorganization investors transferred 1.810 billion shares transferred by all Yinyi shareholders to increase shares at a price of about 0.41522 yuan / share (i.e. the consideration for the reorganization investors to obtain share 2) (i.e. the reorganization investors to obtain share 2, and the change ratio of share 2 is 44.94%), For details, please refer to the announcement on the court’s ruling to approve the reorganization plan disclosed by the company on December 16, 2020. Since its main purpose is to conditionally introduce reorganization investors and pay off the liabilities of Yinyi shares by paying off debts with shares, which will bring substantial value improvement to the owner’s equity of the listed company, it is used as the calculation base of this ex right price.
4. As the capital reserve was converted into shares, a total of 5.969 billion shares were converted, so the total share change ratio was 148.20%.
2、 Explanation on the rationality of the calculation formula of adjusted ex right reference price
Ex dividend is due to the increase of the company’s share capital and the decrease of the actual value of the enterprise (net assets per share) represented by each share. If the ex dividend and ex dividend are not carried out, the stock price of the listed company will fluctuate greatly, which is not conducive to the comparative analysis of the stock price by investors. It is necessary to eliminate these factors from the stock market price after this fact.
1. This equity adjustment is different from the situation that the owner’s equity of the company remains unchanged before and after the increase
Yinyi shares’ conversion of capital reserve into share capital this time is different from the behavior of simply issuing additional shares for dividend in a general sense. The conversion of capital reserve into shares is a market-oriented and negotiated transaction through judicial procedures. The transferred shares will be mainly used to offset debts with shares and introduce restructuring investors. According to the provisions of the reorganization plan, creditors will use about 6.135 billion yuan of creditor’s rights to pay off their debts with shares, and the reorganization investors will invest 3.2 billion yuan to acquire shares (of which 2.449 billion will be used to solve the occupation of major shareholders and the return of cash dividends). On the whole, before and after the increase, while expanding the share capital, the company paid off and offset the company’s debts and increased the owner’s equity of the company. This equity adjustment is different from the situation that the owner’s equity of the company remains unchanged before and after the increase.
2. After the reorganization, it will improve the company’s financial fundamentals and solve the problems left over by history
After this reorganization, the asset liability structure of Yinyi shares will be further optimized, and the fundamentals of the company will change. After the reorganization, the total liabilities of the company will be greatly reduced, the financial situation will be effectively improved, the net assets will be significantly thickened, and the value of shares owned by shareholders will be increased. At the same time, the completion of the reorganization can effectively solve the problems faced by the company, such as the occupation of non operating funds by major shareholders and the inability to effectively perform performance compensation, and fully protect the interests of all minority shareholders.
3. The issue of whether to remove the rights or not shall be considered in the two parts of the investor’s equity adjustment plan
In the two parts of the investor’s equity adjustment plan, whether to remove the right or not shall be considered uniformly. The reason is that the “two conversion increases” mentioned in the investor group equity adjustment plan is actually two parts of the same investor equity adjustment plan, and the “two conversion increases” are interdependent. In the first part, the conversion of value-added shares completed the performance compensation commitment of relevant shareholders through the conversion of value-added shares. At the same time, the major shareholders and their controlling shareholders introduced restructuring investors by transferring their own converted shares, which solved the problem of non operating capital occupation of controlling shareholders and related parties, and effectively protected the rights and interests of listed companies and minority shareholders; The second part is the conversion of value-added shares, which solves the problem of heavy debt burden of listed companies, effectively resolves the debt risk of listed companies, avoids delisting of listed companies, and effectively protects the rights and interests of listed companies and minority shareholders. Since the realization of the above objectives at the same time depends on the implementation of the investor’s equity adjustment plan, and the “two-part increase conversion” in the investor’s equity adjustment plan is a part of the same investor’s equity adjustment plan in the same reorganization procedure, and the actual operation is only increased once, so we should consider whether to remove the rights and interests in combination and only do a unified removal. Therefore, as the capital reserve is converted into shares, a total of 5.969 billion shares are converted, so the total share change ratio is 148.20%.
4. When specifically calculating the ex right price, the calculation base of the ex right price shall be calculated separately according to the impact of each part of the increase on the owner’s equity
Although the two parts of the capital contributor’s equity adjustment plan should be considered in a unified manner when determining whether to eliminate the right or not, when calculating the price after removing the right, due to the different impact of each part of the increase on the owner’s equity, based on the basic calculation logic that the stock price is equal to the total value of the shares divided by the total share capital, Therefore, it is necessary to consider whether it is used as the calculation base according to its situation. Among them, the transfer of 6.48 converted shares per 10 shares will not bring substantial value improvement to the owner’s equity of the listed company because its main purpose is to properly solve the historical problems of capital occupation and cash dividend return, and distribute it to all shareholders except the controlling shareholders and their controlling shareholders, Therefore, it will not be used as the calculation base of this ex right price; The converted shares of 5.06 shares per 10 shares will bring substantial value improvement to the owner’s equity of listed companies because their main purpose is to conditionally introduce restructuring investors and pay off the liabilities of Yinyi shares by paying off debts with shares, Therefore, it serves as the calculation base of this ex right price (for specific calculation instructions, see “I. adjustment to the calculation formula of ex right reference price”). 5. The calculation of the adjusted ex right reference price is conducive to protecting the interests of minority shareholders
If, according to the calculation formula of ex right reference price specified in article 4.4.2 of the trading rules of Shenzhen Stock Exchange, the thickening effect of restructuring investors and creditors on the company’s net assets is not considered, and the ex right adjustment is simply carried out according to the current share price / share capital change ratio, even considering the shares obtained by medium and small shareholders in the process of restructuring, they will bear a large book loss, It is not in line with the objective situation that the reorganization of listed companies has brought improvement to the financial fundamentals of listed companies. Based on the adjusted ex right reference price calculation formula, the shareholding cost of minority shareholders before and after the capital reserve is increased will remain relatively stable, which is conducive to protecting the interests of minority shareholders.
In conclusion, the independent financial adviser believes that the calculation formula of ex right reference price is not in line with the actual situation of the company’s conversion of capital reserve into shares in this reorganization, which is not conducive to the protection of the interests of minority shareholders. Therefore, the calculation formula of ex right reference price needs to be adjusted. The calculation formula of ex right reference price after this adjustment is reasonable.
(there is no text on this page, which is the seal page of China Merchants Securities Co.Ltd(600999) special opinions on Yinyi Co.Ltd(000981) adjustment of ex right formula for conversion of restructured capital reserve into shares)
China Merchants Securities Co.Ltd(600999) mm / DD / 2022
