On the evening of March 1, Everbright Securities Company Limited(601788) disclosed that it had received the disciplinary decision issued by the Shanghai Stock Exchange, and criticized Everbright Securities Company Limited(601788) for many flaws in the MPS case.
In the MPS project in 2016, Everbright capital, a Everbright Securities Company Limited(601788) subsidiary, assumed a risk exposure of up to 5 billion yuan, although it only invested 60 million yuan as the inferior rear. A series of chain reactions caused by this have also made Everbright Securities Company Limited(601788) remain at the forefront of the storm in recent years.
A few years later, Fengfeng Group, which participated in the acquisition, has withdrawn from the market, and Everbright Securities Company Limited(601788) has been “greatly weakened” by the project. According to the annual report of Everbright Securities Company Limited(601788) 2020, by the end of 2020, the total debt undertaken by Everbright Securities Company Limited(601788) due to MPS project had reached 4.552 billion yuan.
The disciplinary decision issued by the Shanghai Stock Exchange is also a circular criticism of Everbright Securities Company Limited(601788) in the case for a number of defects in information disclosure. Before that, Everbright Securities Company Limited(601788) had received a ticket from Shanghai Securities Regulatory Bureau for similar problemsP align = “center” source: company announcement
Origin of acquisition
In May 2016, Fengfeng Group announced that it would jointly set up Jinxin fund with its wholly-owned subsidiary, Everbright Securities Company Limited(601788) subsidiary Everbright capital’s Everbright Baptist and other limited partners, and complete the purchase of 65% equity held by MPs shareholders through the establishment of SPV.
The total fund-raising scale of Jinxin fund is 5.203 billion yuan, with a total of 14 partners, of which Everbright capital, as one of the inferior partners, only invested 60 million yuan, but signed the difference supplement letter to the priority investors, which mainly reads that “when the priority partners cannot withdraw, Everbright capital shall bear the corresponding difference supplement obligation.”
However, just two years later, in October 2018, the British High Court issued an MPs bankruptcy liquidation order, and Jinxin fund failed to exit as planned, making the fund face great risks.
It is precisely because of this “difference supplement letter”, Everbright capital, which participated in the project with a bad fund of 60 million yuan, assumed the acquisition risk of almost the whole project, which also made Everbright the main debt repayment subject of MPS case.
Affected by this, the performance of Everbright Securities Company Limited(601788) 2018 and 2019 was dragged down. According to the company’s 2018 and 2019 annual reports, the cumulative accrued estimated liabilities for the potential risks of MPS project have exceeded 3 billion yuan, and the consolidated net profit has been reduced by nearly 2.4 billion yuan in two years. In the 2020 annual report, the company further accrued the estimated liabilities of MPS project of RMB 1.55 billion. By the end of 2020, Everbright had undertaken a total debt of 4.552 billion yuan due to the MPS project.
violations mainly focus on three core issues
On the evening of March 1, Everbright Securities Company Limited(601788) disclosed that it had received the disciplinary decision issued by the Shanghai Stock Exchange, and criticized Everbright Securities Company Limited(601788) for many flaws in the MPS case.
The primary problem is that major contracts are not disclosed in time Everbright Securities Company Limited(601788) a wholly-owned subsidiary of Everbright capital issued a “difference replenishment letter” to China Merchants Bank Co.Ltd(600036) and Huarui bank, the stakeholders of the priority limited partner of Jinxin fund, promising that if the priority limited partner cannot withdraw, Everbright capital will bear the corresponding difference replenishment obligation, and the corresponding principal and interest exposure amounts are RMB 3.489 billion and RMB 498 million respectively, totaling about RMB 3.987 billion.
The Shanghai Stock Exchange said that the “difference supplement letter” clearly undertakes the corresponding difference supplement obligation. Since then, the company has also fully accrued the estimated liabilities for the principal and interest obligations undertaken. The amount of the above balance making up obligation accounted for 52.14% of the company’s audited net profit in 2015, but the company did not disclose the above matters in time and did not disclose them until February 2, 2019.
Secondly, the progress of major litigation matters was not disclosed in time. For the relevant major litigation matters caused by the difference supplement letter, the Shanghai Stock Exchange believes that the company has not disclosed the relevant judgment results in time.
In addition, the disclosure of major transactions between factor company Guangzheng financial holding and Sun Hung Kai Co., Ltd. was incomplete, and Everbright Securities Company Limited(601788) was also pointed out to be in violation of letter phi.
three arguments were rejected
For several letter Phi violations proposed by the Shanghai Stock Exchange, Everbright Securities Company Limited(601788) put forward relevant defense reasons in the objection reply, but they were considered by the Shanghai Stock Exchange to be untenable.
For the untimely disclosure of major contracts, the company proposed that the balance supplement letter issued by Everbright capital belongs to the credit enhancement or guarantee measures provided by Everbright capital to the counterparty in its daily business, and the conditions, probability and amount under the balance supplement letter are difficult to predict and quantify.
However, the Shanghai Stock Exchange believes that the reasons put forward by the company just show that there is a significant risk of uncertainty in the corresponding balance making up responsibility that the company may bear due to relevant major contracts.
For the untimely disclosure of the progress of major litigation matters, the company explained it on the grounds of phased disclosure. However, the Shanghai Stock Exchange believes that the company failed to disclose the results of major litigation appeal and second instance judgment in time, and the violation facts are clear.
As for the incomplete disclosure of major transactions, the Shanghai Stock Exchange believes that the company should truthfully, accurately, completely and timely disclose the subsequent acquisition arrangements between the company and the counterparty on the underlying equity.
According to the disciplinary decision, Everbright Securities Company Limited(601788) then chairman Xue Feng, as the person in charge of the company’s operation and management and information disclosure, also served as the chairman of Everbright capital during the relevant period, decided and approved the MPS project, was clearly aware of the signing of the difference supplement letter, and was directly and primarily responsible for the untimely disclosure of the company’s major contracts.
At the same time, as the chairman of Guangzheng financial holding, he led and promoted the acquisition in the whole process, did not urge the company to disclose important matters such as put rights and performance guarantees, and was also primarily responsible for the incomplete disclosure of the company’s major transaction information.
important functional cadres are constantly reviewed
Prior to this, Everbright Securities Company Limited(601788) has received a ticket from Shanghai Securities Regulatory Bureau for similar problems.
On the evening of January 7, Everbright Securities Company Limited(601788) said it had received the warning letter issued by Shanghai Securities Regulatory Bureau. After investigation, the company has many problems, such as delayed disclosure of major contracts. Most of these problems are related to the chain reaction caused by the explosion of the aforementioned MPs acquisition case.
Due to the MPS case, Xue Feng was taken away by relevant parties for investigation earlier. Up to now, according to media reports, Xue Feng has been transferred to the procuratorial organ. At present, Xue Feng is suspected of dereliction of duty and bribery.
It is worth noting that in addition to Xue Feng, Everbright Securities Company Limited(601788) there are also important functional cadres under review.
In November 17, 2021, the Heilongjiang Discipline Inspection Commission website issued a public official account. Du Xiongfei, general manager of Everbright Securities Company Limited(601788) debt financing headquarters and general manager of investment bank headquarters, was suspected of serious violation of laws and regulations. Currently, he is receiving disciplinary inspection by the discipline inspection and supervision group of the Central Commission for discipline inspection and the Daqing municipal supervisory committee.
After the release of the above notice, Everbright Securities Company Limited(601788) responded that it would not affect the normal operation of the company.
On February 24, according to the website of the Central Commission for Discipline Inspection and the State Supervision Commission, the fifth inspection team of the Central Committee fed back the inspection situation to the Party committee of China Everbright Group Co., Ltd. The rectification opinions put forward by Yang Zhengchao, the leader of the inspection team, include: strengthening the supervision and management of key posts, especially the “top leaders”, carrying out in-depth warning education in combination with typical cases in the financial field, and promoting the integration of not daring to rot, not wanting to rot.
