“It’s three years, but three years later…” this is a line from the movie Infernal Affairs.
The story of Zhuzhou Smelter Group Co.Ltd(600961) ( Zhuzhou Smelter Group Co.Ltd(600961) , SH; previous closing price of 10.09 yuan / share) and Shuikoushan Nonferrous Metals Co., Ltd. (hereinafter referred to as Shuikoushan Co., Ltd.) can also be summarized by this line.
Recently, Zhuzhou Smelter Group Co.Ltd(600961) announced that the company is planning a major asset restructuring, which involves the purchase of 100% equity of Shuikoushan Co., Ltd. held by Hunan Shuikoushan Nonferrous Metals Group Co., Ltd. (hereinafter referred to as Shuikoushan group).
It is understood that Shuikoushan group and Zhuzhou Smelter Group Co.Ltd(600961) had the problem of horizontal competition before, because part of its business of Shuikoushan Co., Ltd. coincided with Zhuzhou Smelter Group Co.Ltd(600961) Co., Ltd. In 2010, Zhuzhou Smelter Group Co.Ltd(600961) the ultimate actual controller, China Minmetals Corporation (hereinafter referred to as Minmetals Group), issued a statement to the CSRC and promised to solve this problem within three years. In 2013, Minmetals Group asked for an extension of three years to fulfill its commitment to solve horizontal competition.
The story of “three years later and three years later” ends in 2019 Zhuzhou Smelter Group Co.Ltd(600961) 2019 financial report shows that the company and Shuikoushan Co., Ltd. no longer form a horizontal competitive relationship. Zhuzhou Smelter Group Co.Ltd(600961) plans to acquire 100% equity of Shuikoushan Co., Ltd. this time, which may become the follow-up of the story.
“three years later and three years later” why is the horizontal competition difficult to solve
In mid July 2007, Hunan SASAC transferred 83.74% of the equity of Shuikoushan group controlled by it to Hunan Nonferrous Metals Holding Group Co., Ltd. (hereinafter referred to as “Hunan Nonferrous Metals Holding”).
From the perspective of equity penetration, Hunan Nonferrous Metals Holdings is the actual controller of Zhuzhou Smelter Group Co.Ltd(600961) . At the end of July 2010, Minmetals Group completed the acquisition of Hunan Nonferrous Metals Holdings. Therefore, Minmetals Group has become the ultimate actual controller of Zhuzhou Smelter Group Co.Ltd(600961) company.
At that time, Zhuzhou Smelter Group Co.Ltd(600961) was mainly engaged in the smelting and sales of lead, zinc and other metals, while Shuikoushan Co., Ltd. under Shuikoushan group was also engaged in the smelting of lead and zinc. Therefore, the two sides have the problem of horizontal competition.
On August 30, 2007, Zhuzhou Smelter Group Co.Ltd(600961) received the notice on requiring Zhuzhou Smelter Group Co.Ltd(600961) rectification within a time limit issued by Hunan securities regulatory bureau, which mentioned the horizontal competition between Zhuzhou Smelter Group Co.Ltd(600961) and Shuikoushan Co., Ltd.
In June 2010, Minmetals Group issued the statement on solving the problem of Zhuzhou Smelter Group Co.Ltd(600961) horizontal competition to the CSRC, promising to solve the above-mentioned horizontal competition problems within three years.
However, in July 2013, Minmetals Group sent a letter to Zhuzhou Smelter Group Co.Ltd(600961) , requesting an extension of three years to fulfill its commitment to solve horizontal competition.
In 2014, Zhuzhou Smelter Group Co.Ltd(600961) announced that after discussion by the board of directors of the company, Minmetals Group was agreed to extend its commitment to solve horizontal competition for three years (i.e. before July 31, 2016).
Finally, in the 2019 financial report, Zhuzhou Smelter Group Co.Ltd(600961) said that in 2018, the company shut down all smelting capacity of Qingshuitang base in Shifeng District, Zhuzhou City, Hunan Province, and built 300000 tons of zinc smelting system and 100000 tons of lead refining and rare and precious comprehensive recovery system (hereinafter referred to as “lead refining system”) in Shuikoushan Industrial Park, Changning City, Hengyang City, Hunan Province.
In 2019, Zhuzhou Smelter Group Co.Ltd(600961) built the lead refining system and leased the assets to Shuikoushan Co., Ltd. The original zinc smelting system and lead refining system of Shuikoushan Co., Ltd. have been shut down, and only the mine and lead roughing system have been retained. So far, the main business of Shuikoushan Co., Ltd. is the production and purchase and sale of the original mine and lead smelting, and the main business of Zhuzhou Smelter Group Co.Ltd(600961) is the production and purchase and sale of zinc smelting. The two sides have not formed a horizontal competition relationship.
From 2007 to 2019, after four “three years”, Zhuzhou Smelter Group Co.Ltd(600961) finally solved the problem of horizontal competition with Shuikoushan Co., Ltd.
acquisition of Shuikoushan Co., Ltd. has been suspended for no more than 10 trading days
Nearly three years after the problem of horizontal competition was solved, Zhuzhou Smelter Group Co.Ltd(600961) disclosed the plan to acquire Shuikoushan Co., Ltd.
On the evening of April 7, Zhuzhou Smelter Group Co.Ltd(600961) announcement shows that the company is planning a major asset restructuring, which involves the purchase of 100% equity of Shuikoushan Co., Ltd. held by Hunan Shuikoushan group by issuing shares and paying cash, and the purchase of 208333% equity of Hunan Zhuzhou metallurgical Nonferrous Metals Co., Ltd. held by Hunan Xiangtou Jinye private equity investment fund (limited partnership) by issuing shares and raising supporting funds.
Zhuzhou Smelter Group Co.Ltd(600961) said that the above transactions are expected to constitute a major asset restructuring and related party transactions. The trading of the company’s shares shall be suspended from the opening of the market on April 8, 2022 for no more than 10 trading days.
In fact, when the problem of horizontal competition had not been solved many years ago, Minmetals Group considered whether to inject some assets of Shuikoushan Co., Ltd. into Zhuzhou Smelter Group Co.Ltd(600961) .
According to an announcement in 2014, Minmetals Group had thought about injecting the interbank assets of Shuikoushan Co., Ltd. into Zhuzhou Smelter Group Co.Ltd(600961) to solve the problem of interbank competition, but from 2010 to 2013, the smelting business of Shuikoushan Co., Ltd. showed a loss trend for consecutive years.
Zhuzhou Smelter Group Co.Ltd(600961) said that accepting the smelting business of Shuikoushan Co., Ltd. in a loss state at this time will not only not increase the company’s performance, but also bring great operational risks to the company, and even affect Zhuzhou Smelter Group Co.Ltd(600961) ‘s listing status and damage the rights and interests of the company and shareholders.
In the case that the above scheme is not feasible, Minmetals Group also wants to entrust Shuikoushan Co., Ltd. to Zhuzhou Smelter Group Co.Ltd(600961) management, so as to solve the problem of horizontal competition.
However, the announcement shows that Shuikoushan Co., Ltd. is a 100 year old enterprise with a particularly heavy historical burden, heavy restructuring difficulties, huge personnel costs and a very high asset liability ratio. If Shuikoushan Co., Ltd. is entrusted to Zhuzhou Smelter Group Co.Ltd(600961) management, all difficulties faced by Shuikoushan Co., Ltd. at present and in the future will be borne by Zhuzhou Smelter Group Co.Ltd(600961) and Zhuzhou Smelter Group Co.Ltd(600961) will face delisting risk caused by limited carrying capacity.
In addition, “unifying the purchase and sales business of both parties shall be in the charge of Zhuzhou Smelter Group Co.Ltd(600961) “, “dividing the purchase and sales business of both parties into different regions without crossing the border”, “removing Shuikoushan from China Minmetals” and other methods were also considered not feasible at that time.
Now, Zhuzhou Smelter Group Co.Ltd(600961) decided to acquire Shuikoushan Co., Ltd., which may mean that some of the above problems have been solved.
