Do you still have a chance to be the largest shareholder of listed securities companies? The answer is yes.
On April 25, The Pacific Securities Co.Ltd(601099) securities issued a suggestive announcement that the shares held by shareholders will be auctioned by the judiciary. The 10.92% shares held by its largest shareholder Jiayu investment will be auctioned on the judicial auction platform of Beijing Industrial exchange, with the starting price of 1.726 billion yuan, which is 20% off the evaluation price. If you want to participate, the deposit will need 340 million yuan. If you regret shooting, it will not be refunded. If the bidder participates in the judicial auction and transfers the ownership successfully, the bidder will become the largest shareholder of The Pacific Securities Co.Ltd(601099) securities.
Previously, Huachuang securities had wanted to be the actual controller of The Pacific Securities Co.Ltd(601099) securities, but the transaction was terminated due to various reasons, and Jiayu investment swallowed the deposit of 1.5 billion yuan and refused to return it. The judicial auction is the enforcement of this lawsuit, and Huachuang securities will also obtain the priority of compensation for the auction price. Who will become the largest shareholder of The Pacific Securities Co.Ltd(601099) securities in the future? The market is looking forward to it.
10.92% equity of The Pacific Securities Co.Ltd(601099) securities was auctioned
According to the announcement of Beijing Equity Exchange, the auction time of 744 million shares of The Pacific Securities Co.Ltd(601099) securities is scheduled to be from 10:00 on May 26, 2022 to 10:00 on May 27, 2022 (unless delayed), and the public auction will be conducted through the online judicial auction platform of Beijing Equity Exchange.
For listed securities companies, its equity value is also easier to measure. The auction price is based on the stock market value (average closing price from March 24, 2022 to April 22, 2022), 2.90 yuan per share multiplied by the total number of shares multiplied by 80% as the starting price. After the 20% discount, the starting price of 10.92% equity of The Pacific Securities Co.Ltd(601099) securities was 1.726 billion yuan, an increase of 8.6 million yuan.
As The Pacific Securities Co.Ltd(601099) has not disclosed the annual report of 2021, its third quarterly report of 2021 shows that Jiayu investment holds 10.92% equity of The Pacific Securities Co.Ltd(601099) and is the largest shareholder. And this part of the equity has been frozen by the judiciary, and it is expected that there will be no change after the annual report is released. Therefore, if the bidder successfully bids this part of the equity, it will replace Jiayu investment and become the new largest shareholder of The Pacific Securities Co.Ltd(601099) securities.
In addition, a deposit of 340 million yuan is required to participate in the auction. If the buyer regrets the auction after the auction is completed, the deposit paid will not be refunded and will be used to pay the expenses and losses caused by the auction, make up the difference between the re auction price and the original auction price, and offset the debts of the person subjected to execution in this case and the debts of the person subjected to execution related to the auction property. Companies that want to participate in the auction should think about it in advance.
In fact, in addition to the need for financial strength, there are many conditions needed to become the largest shareholder of securities companies. In addition to the financial conditions such as net assets of no less than 50 million yuan and continuous profitability in the last three years, it is also necessary to carry out a series of conditions such as the matching of financial related business experience with the business scope of securities companies, and the coordination between taking shares in securities companies and their own long-term strategy. After the successful bidding, the bidder also needs to obtain the approval of the CSRC for change before it can become the final winner.
Huachuang securities will have priority in repayment
Why is the The Pacific Securities Co.Ltd(601099) equity held by Jiayu investment reduced to auction? This also starts with Huachuang securities seeking to merge The Pacific Securities Co.Ltd(601099) securities in 2019.
At that time, there were many cases or rumors of merger of securities companies in the industry, and the saying of “aircraft carrier securities companies” had just been released. It was attractive to expand and strengthen directly through restructuring Polaris Bay Group Co.Ltd(600155) in reply to the regulatory opinions, he also said frankly that this move is to achieve efficient business coordination, complement resources and advantages, and expand the company’s influence and resource integration ability in the southwest region.
In November 2019, Huachuang securities and Jiayu investment signed the share transfer agreement on The Pacific Securities Co.Ltd(601099) and the voting right entrustment agreement on The Pacific Securities Co.Ltd(601099) . If the agreement is fulfilled, Huachuang securities will obtain 5.87% equity and 5.05% entrusted voting right of The Pacific Securities Co.Ltd(601099) securities and become its largest shareholder.
However, the transaction was not successfully completed in the end. In June 2020, Huachuang securities and Jiayu investment signed an agreement to terminate the transaction on June 3, 2020. As for the reasons for terminating the transaction, Polaris Bay Group Co.Ltd(600155) said that since the outbreak of covid-19 epidemic in 2020, the on-site audit work was difficult, and Jiayu investment failed to effectively coordinate, organize and cooperate, resulting in the failure to fully carry out the due diligence work and the failure to effectively implement the audit procedures. Both parties failed to reach an agreement on the matters found in the preliminary due diligence, and there was a compliance risk event in The Pacific Securities Co.Ltd(601099) securities during the transaction.
The transaction broke up after one auction, but the 1.5 billion yuan deposit previously paid by Huachuang securities was “gone without return”. From November 18, 2019 to November 21, 2019, Huachuang securities paid a deposit of 1.5 billion yuan, of which 899 million yuan finally went to China Merchants Securities Co.Ltd(600999) , which was specially used to repay the principal and interest of stock pledge (including penalty interest) on behalf of Jiayu investment.
To this end, Huachuang securities launched “self rescue” for 744 million shares held by Jiayu investment. About 744 million shares of The Pacific Securities Co.Ltd(601099) securities are held in Jiayu investment, of which 581 million shares have been pledged to Huachuang securities to provide guarantee for the deposit of 1.5 billion yuan; 349 million shares were frozen by Huachuang securities through pre litigation property preservation. Since then, Huachuang securities filed a lawsuit against the equity transfer dispute to the second intermediate people’s Court of Beijing.
In October 2021, the second intermediate people’s Court of Beijing ruled that Jiayu investment should repay the deposit of 1.5 billion yuan, interest and liquidated damages to Huachuang securities, and pay the litigation preservation liability insurance premium. Huachuang securities has the priority to be repaid within the scope of debt from the auction and sale of 581 million shares of The Pacific Securities Co.Ltd(601099) securities held by Jiayu investment. Tianyancha information shows that Jiayu investment was enforced by the court in December 2021.
who will be the new major shareholder
After Huachuang securities gave up the inclusion of The Pacific Securities Co.Ltd(601099) securities, it is not uncommon for Huachuang securities to consider acquiring The Pacific Securities Co.Ltd(601099) securities. After all, The Pacific Securities Co.Ltd(601099) securities currently has no actual controller. It is very rare for a company that wants to supplement its license to earn a brokerage license at a low price and gain the right to control a listed company at the same time.
Among the listed securities companies, The Pacific Securities Co.Ltd(601099) has performed poorly in recent years.
In terms of rating, from 2017 to 2020, the ratings of The Pacific Securities Co.Ltd(601099) securities were a, BB, B and CCC respectively, all the way down to class C securities companies, which also affected their business development. Huge losses occurred in 2018 and 2020.
However, under the overall “year of securities industry” in 2021, The Pacific Securities Co.Ltd(601099) securities is expected to make a profit. In January this year, The Pacific Securities Co.Ltd(601099) released the announcement of 2021 earnings forecast, which is expected to realize the net profit attributable to the parent company of RMB 90 million to RMB 120 million.
In addition, from October to December 2021, The Pacific Securities Co.Ltd(601099) securities received warning letters issued by Sichuan Securities Regulatory Bureau and Shaanxi securities regulatory bureau respectively. Sichuan Securities Regulatory Bureau proposed that The Pacific Securities Co.Ltd(601099) securities had problems in the recommendation letter for the resumption of listing issued by Tianxiang environment, the elements of the working paper were incomplete, and no problems of listed companies were found in the recommendation verification. Shaanxi Securities Regulatory Bureau believes that The Pacific Securities Co.Ltd(601099) securities failed to fulfill the obligation of diligence for the non-public issuance of corporate bonds by Hancheng urban investment.
Who will become the new major shareholder of The Pacific Securities Co.Ltd(601099) securities at the time of continuous litigation and regulatory roll call? Previously, The Pacific Securities Co.Ltd(601099) had answered investors’ questions and said that the company under China Resources had contact with major shareholders. This news once gave investors a “shot in the arm”, but then there was no more. On the occasion of this equity auction, will China Resources take any action?
In this regard, The Pacific Securities Co.Ltd(601099) in reply to the investors on SSE E interaction, said that the affiliated companies of China Resources had made preliminary contact with the company’s shareholder Jiayu investment, and the two sides had not signed any share transfer agreement, so there was no substantive progress at present.
