On February 16, Safbon Water Service (Holding) Inc.Shanghai(300262) (300262. SZ) disclosed that the company and its former controlling shareholder, former actual controller and current Vice Chairman Zhang Chunlin were suspected of illegal information disclosure and were filed for investigation by the CSRC.
Although Safbon Water Service (Holding) Inc.Shanghai(300262) claimed that “the investigation will not have a significant impact on the company’s daily operations”. However, as a key step in the transfer of its controlling shares, the company’s fixed increase plan has been stopped.
The company admitted that according to the provisions of the measures for the administration of securities issuance and registration of companies listed on the gem (for Trial Implementation), listed companies and current directors are suspected of violating laws and regulations and are being investigated by the CSRC. The company shall not issue shares to specific objects. The matters involved in this investigation are not expected to involve major illegal compulsory delisting.
major events are not disclosed repeatedly
Safbon Water Service (Holding) Inc.Shanghai(300262) This investigation by the CSRC is not without warning.
The previous day (February 15), Safbon Water Service (Holding) Inc.Shanghai(300262) received a warning letter from Shanghai Securities Regulatory Bureau. According to the investigation, the listed company has problems such as non-standard management and use of raised funds, failure to disclose major matters that may affect its solvency in time, inaccurate information disclosed in relevant annual periodic reports and so on.
Specifically, as the issuer of corporate bonds, Safbon Water Service (Holding) Inc.Shanghai(300262) did not use the raised funds in strict accordance with the approved purposes, and the actual use of some of the raised funds of the company’s “17 ba’an bonds” was inconsistent with the prospectus; Meanwhile, the company did not strictly implement the regulations on the management and use of the special account for raised funds, transferred the raised funds of “17 ba’an bonds” from the special account to other accounts of the company from October to December 2017, and used part of the raised funds through other accounts.
At the same time, by the end of September 2018, the company’s loan balance had increased by 473 million yuan compared with the loan balance at the end of 2017, accounting for 21.97% of the net assets at the end of 2017, Safbon Water Service (Holding) Inc.Shanghai(300262) did not timely disclose the above events that the accumulated new loans in that year exceeded 20% of the net assets at the end of the previous year until June 11, 2019, and this news was a major event that may affect the solvency.
The Shanghai Securities Regulatory Bureau also found that the information disclosed in the Safbon Water Service (Holding) Inc.Shanghai(300262) relevant annual periodic reports was inaccurate. First of all, the company did not include the controlled investment objects in the consolidated statements. By the end of December 2017, the company had obtained the control of Nanchang ba’an boning environmental protection industry investment center (hereinafter referred to as “Nanchang ba’an”), but Nanchang ba’an was not included in the consolidated statements in the annual reports from 2017 to 2019, which did not comply with the relevant provisions of the accounting standards for business enterprises.
Secondly, the disclosure of the mortgage of the company’s land use right is incomplete. In May 2020, Dongying Deyou Environmental Protection Technology Co., Ltd., a wholly-owned subsidiary of the company, provided 86551.79 square meters of industrial land with mortgage guarantee to Suzhou Financial Leasing Co., Ltd. the debt period attached to the mortgage is from May 26, 2020 to May 26, 2028, Its 2020 semi annual report did not disclose the mortgage of the above land use right.
In addition, the disclosure of Safbon Water Service (Holding) Inc.Shanghai(300262) is inaccurate. The company’s 2019 annual report disclosed a total of 208 million yuan of restricted funds at the end of the period, which is inconsistent with the actual amount of restricted funds at the end of 2019. The disclosure of the objects and amounts of the company’s top five other receivables and prepayments is also inaccurate. The objects and amounts of the company’s top five other receivables and top five prepayments presented in the company’s 2019 annual report and 2020 semi annual report are inconsistent with the actual situation.
As the original controlling shareholder and the original actual controller of Safbon Water Service (Holding) Inc.Shanghai(300262) , Zhang Chunlin also violated regulations for many times. At the end of November 2021, the Shenzhen Stock Exchange issued a notice of punishment decision, pointing out that Safbon Water Service (Holding) Inc.Shanghai(300262) and its original actual controller and then chairman Zhang Chunlin had problems such as inaccurate and untimely correction of 2020 performance forecast, occupation of non operating funds and so on.
In particular, the occupation of non operating funds by the actual controller and its related parties has attracted more regulatory attention. Safbon Water Service (Holding) Inc.Shanghai(300262) it was not “self exposed” until May 2021. In May 2019, the company signed an equipment procurement contract with Shanghai Jielan Trading Co., Ltd. (hereinafter referred to as “Jielan trading”), an affiliate of the original actual controller Zhang Chunlin. From June 2019 to April 2020, Safbon Water Service (Holding) Inc.Shanghai(300262) made several payments to Jielan commerce and trade, but Jielan commerce and trade did not deliver equipment to Safbon Water Service (Holding) Inc.Shanghai(300262) ; In May 2020, Safbon Water Service (Holding) Inc.Shanghai(300262) asked Jielan commerce to terminate the contract and refund. Safbon Water Service (Holding) Inc.Shanghai(300262) the capital transaction of RMB 12.63 million with Jielan trading in 2020 constitutes the occupation of non operating funds by the actual controller and its related parties, with a maximum daily occupation of RMB 11.35 million. As of March 2021, the relevant funds have been recovered.
On November 28, 2021, the company disclosed that there may be other risks of illegal stock transactions, and the company may provide warnings on November 28, 2022. It is reported that from March 2018 to September 2019, Zhang Chunlin pledged 149294900 shares of the issuer to Shenwan Hongyuan Group Co.Ltd(000166) securities, Xiangcai securities and Kaiyuan securities, raising 372 million yuan in his own name, These funds are mainly used for Zhang Tong’s acquisition of 49% equity of Beijing Longyuan Environmental Protection Engineering Co., Ltd. (hereinafter referred to as “Beijing Longyuan”) through Shanghai Yingsu Environmental Protection Technology Co., Ltd. (hereinafter referred to as “Yingsu environmental protection”). In December 2019, Safbon Water Service (Holding) Inc.Shanghai(300262) purchased 49% equity of Beijing Longyuan held by Yingsu environmental protection for RMB 461 million, but Safbon Water Service (Holding) Inc.Shanghai(300262) failed to pay the full equity transfer to Yingsu environmental protection in time due to lack of funds, resulting in Zhang Chunlin’s inability to repay the above financing funds as agreed. In order to solve the problem of capital turnover, Zhang Chunlin pledged his Safbon Water Service (Holding) Inc.Shanghai(300262) 40 million shares to Ren Yuan in July 2020, borrowed 130 million yuan from Ren Yuan to repay the above part of the financing funds, and Safbon Water Service (Holding) Inc.Shanghai(300262) provided guarantee for the loan at the request of Ren Yuan. This guarantee was not deliberated by the board of directors and the general meeting of shareholders of the company, which violated the articles of association and other relevant provisions.
the fixed increase was forced to stop, and the transfer of controlling shares should change
Under the investigation, Safbon Water Service (Holding) Inc.Shanghai(300262) the fixed increase plan started in April last year had to be stopped. After receiving the warning letter from Shanghai Securities Regulatory Bureau, the relevant person of the company told the interface news reporter, “at present, the company is still querying relevant laws and regulations to evaluate the impact of receiving the warning letter.”
For Safbon Water Service (Holding) Inc.Shanghai(300262) which has been in debt crisis since 2020, this situation is really bad.
According to the public information, Safbon Water Service (Holding) Inc.Shanghai(300262) main business covers industrial water treatment, municipal water treatment and solid waste treatment. The performance forecast for 2021 shows that the company’s loss continued to expand last year, with an estimated loss of 570 million yuan to 730 million yuan, and a loss of 470 million yuan in the same period in 2020. Safbon Water Service (Holding) Inc.Shanghai(300262) said that in 2021, due to the covid-19 epidemic and the financing environment of the company’s debt crisis, the company’s external orders decreased; In addition, the company delayed the commencement of some projects and slowed down the construction progress of projects under construction, resulting in a decrease of about 50% in the company’s operating revenue in 2021 compared with the same period of the previous year; Last year, the company accrued about 45 million yuan of credit impairment losses of various receivables, 121 million yuan of asset impairment losses, 120 million yuan of long-term equity investment impairment losses and 55 million yuan of estimated liabilities.
Safbon Water Service (Holding) Inc.Shanghai(300262) profitability in recent years
At present, Safbon Water Service (Holding) Inc.Shanghai(300262) debt repayment pressure is not small. as of September 30, 2021, the company’s consolidated asset liability ratio was 66.22%. The total liabilities of company were about 3.447 billion yuan, current liabilities were 3.059 billion yuan, interest bearing liabilities balance was 1.604 billion yuan, short-term loans and non current liabilities due within one year were 1.275 billion yuan, and monetary funds on the account were 157 million yuan.
In addition, Safbon Water Service (Holding) Inc.Shanghai(300262) the latest litigation situation disclosed in December 2021 shows that from September 26, 2019 to December 1, 2021, the cumulative amount of litigation and arbitration matters involved in the company and its holding subsidiaries amounted to 1.494 billion yuan .
In retrospect, Safbon Water Service (Holding) Inc.Shanghai(300262) has been in debt crisis since 2020. In October 2017, Safbon Water Service (Holding) Inc.Shanghai(300262) issued corporate debt and raised 800 million yuan to repay bank loans and other interest bearing debts and supplement working capital. When the market opened on June 23, 2020, the trading of 17 ba’an bonds was suddenly suspended because there were major matters that were not disclosed; On June 29 of the same year, the trading of 17 ba’an bonds resumed, and its main body and debt were adjusted by the rating agency zhongchengxin international from stable outlook to “included in the observation list of possible downgrade”.
At that time, China integrity international believed that the profitability of Safbon Water Service (Holding) Inc.Shanghai(300262) in 2019 was weakening; Accounts receivable occupy a large amount of working capital and cash collection is poor; The debt scale continues to increase, and there is great pressure on short-term debt repayment; Equity acquisition pushes up the liquidity pressure of the company and the proportion of equity pledge of the actual controller is high. According to the financial data, the total balance of Safbon Water Service (Holding) Inc.Shanghai(300262) interest bearing liabilities from 2017 to 2019 and from January to June 2020 was 1.207 billion yuan, 1.706 billion yuan, 2.073 billion yuan and 2.085 billion yuan respectively.
As the debt crisis intensified, Zhang Chunlin tried to cash out. On September 14, 2020, Safbon Water Service (Holding) Inc.Shanghai(300262) said that after negotiation, it was proposed that Zhuhai Water Environment Holding Group Co., Ltd. (hereinafter referred to as “Zhuhai Water”) would subscribe and resell the 300 million yuan bonds applied for resale by the original “17 ba’an bonds” bondholders, Safbon Water Service (Holding) Inc.Shanghai(300262) provided guarantee, and Zhang Chunlin provided joint and several liability guarantee. At the end of September, the company announced that Zhang Chunlin planned to transfer 159912355 shares to Zhuhai Water, accounting for 23.88% of the total share capital, which will be transferred in three times; At the same time of the first share transfer, Safbon Water Service (Holding) Inc.Shanghai(300262) simultaneously issued no more than 200 million additional shares to Zhuhai Water, the issue price was 4.42 yuan / share, and raised about 845 million yuan. However, by mid October 2020, the negotiation on the relevant share transfer failed, Zhuhai Water failed to reach an agreement on the core terms of the subscription and resale of “17 ba’an bonds”, and the share transfer of the actual controller ended.
After the failure of capital injection, the cashing risk of 17 ba’an bonds increased and the trading was suspended on October 19, 2020. China integrity international lowered the main credit rating of Safbon Water Service (Holding) Inc.Shanghai(300262) from AA to BB, lowered the credit rating of “17 ba’an debt” from AA to BB, and continued to include the main body and “17 ba’an debt” in the observation list of possible degradation; China integrity International believes that the termination of resale subscription increases the uncertainty faced by the principal and interest payment of the resale amount of “17 ba’an bonds”, and there is a high risk of default.
It is disclosed that by October 19, 2020, there are still 3999800 “17 ba’an bonds”, with a face value of about 400 million yuan, which cannot be paid on schedule. Then, in mid November, China integrity international lowered the subject credit rating of Safbon Water Service (Holding) Inc.Shanghai(300262) from B to CCC, and continued to include the subject in the observation list of possible degradation. Zhongchengxin International believes that the operation of Safbon Water Service (Holding) Inc.Shanghai(300262) at that time was seriously deteriorated compared with the same period of last year. The current available monetary funds of the company were tight, and the controlling shareholders did not have sufficient available monetary funds to provide financial support for the company. The external financing environment of the company was not significantly improved, the capital continued to deteriorate, and the liquidity was extremely tight.
But the turnaround came again in early 2021. According to its disclosure on March 30, 2021, Zhang Chunlin signed a contract with Shandong Gaochuang Construction Investment Group Co., Ltd. (hereinafter referred to as “Shandong Gaochuang”) to include but not limited to share transfer and private placement, so that the proportion of Safbon Water Service (Holding) Inc.Shanghai(300262) shares held by Shandong Gaochuang and its persons acting in concert exceeds 30%, and the actual control of the company is changed to Shandong Gaochuang. Shandong Gaochuang will help Safbon Water Service (Holding) Inc.Shanghai(300262) solve the repayment of “17 ba’an debt”.
On June 21 last year, Zhang Chunlin transferred 66341458 shares of the company he held to Shandong Gaochuang, with a total transfer price of 337 million yuan. The transfer of relevant shares was completed, and Shandong Gaochuang became the second largest shareholder of Safbon Water Service (Holding) Inc.Shanghai(300262) holding 9.91%.
Changes in shareholders’ Shareholding on June 21, 2021
It is noteworthy that the fixed increase plan is a key step in Safbon Water Service (Holding) Inc.Shanghai(300262) the transfer of control. According to the latest plan, Safbon Water Service (Holding) Inc.Shanghai(300262) plans to issue no more than 200 million shares to Shandong Gaochuang, with an issue price of 3.13 yuan / share and a fund-raising amount of no more than 629 million yuan, which will be used to repay interest bearing debts and supplement working capital. Upon completion, Shandong Gaochuang will hold 267271557 shares of the company, accounting for 30.70% of the total share capital, will become the controlling shareholder of Safbon Water Service (Holding) Inc.Shanghai(300262) , and Weifang High Tech finance and Finance Bureau will become the actual controller of the company.
Over the past year, as a key step in the change of rotational control rights, Safbon Water Service (Holding) Inc.Shanghai(300262) has changed three drafts of the fixed increase plan for issuing shares to Shandong high tech innovation. Now, with the stop of fixed growth, the transfer of the company’s controlling interest may be a variable.
