Liaoning Sg Automotive Group Co.Ltd(600303) since the disclosure of the acquisition of relevant “car shell” assets of the controlling shareholder Huatai Automobile Group Co., Ltd. (hereinafter referred to as Huatai Automobile) at the end of September 2021, there has been continuous controversy. The exchange successively issued inquiry letters and supervision letters. China Securities small and medium-sized Investor Service Center Co., Ltd. (hereinafter referred to as “investment service center”) jointly with other small and medium-sized shareholders sent a letter proposing to submit the acquisition to the extraordinary general meeting of shareholders for deliberation.
On January 14, 2022, the company held an investor briefing on the acquisition. At the meeting, Gong Da, chairman of Liaoning Sg Automotive Group Co.Ltd(600303) , said that vigorously developing the vehicle business, especially the new energy vehicle business, is a major strategy for the company to become bigger and stronger, and the strategic transformation of the enterprise to new energy must be done and done better, This is also the top priority of the current board of directors and members of the management team.
acquisition of related party “car shell” electric vehicle
Back to the announcement, on September 27, 2021, Liaoning Sg Automotive Group Co.Ltd(600303) announced that in order to accelerate the progress of pure electric passenger vehicle project and promote new energy passenger vehicles to the market as soon as possible, it is proposed to acquire the advanced and mature technology of Chery S18 (Ruiqi M1) and s18d (Ruiqi x1) models held by the related party Tianjin Meiya New Energy Vehicle Co., Ltd. (hereinafter referred to as Tianjin Meiya), and develop and produce pure electric cars and SUVs.
According to the announcement, Tianjin Meiya is a wholly-owned subsidiary of Huatai Automobile, the controlling shareholder of the company. Liaoning Sg Automotive Group Co.Ltd(600303) the transferee is the unpowered body assets of the first two models held by Tianjin Meiya, including fixed assets such as molds, fixtures, inspection tools and special welding equipment mainly used for the two models, as well as intangible assets such as relevant patents and design of the two models. The consideration paid by Tianjin Meiya when it obtained the relevant assets from Chery was 140 million yuan, Liaoning Sg Automotive Group Co.Ltd(600303) the acquisition deducted 7.7 million yuan of reduction expenses on the basis of the original 140 million yuan, and finally determined the pricing based on 132.3 million yuan, combined with the third-party evaluation value to determine the final transaction price.
For this acquisition, Liaoning Sg Automotive Group Co.Ltd(600303) said that by acquiring advanced and mature technologies and continuously digesting and absorbing independent research and development, the company can fill the gap in the pure electric passenger vehicle market, timely understand the latest product and technology development trends of pure electric passenger vehicles, and accelerate the transformation of the company’s product structure.
According to the initial agreement, 50% of the total price will be paid by Liaoning Sg Automotive Group Co.Ltd(600303) within 5 working days after the signing of the contract, and the remaining 50% will be paid before December 25, 2021. However, due to the great dispute over the acquisition, on December 15, 2021, the two parties to the transaction signed a supplementary agreement on the acquisition, agreeing that the balance of the second phase shall be subject to the evaluation conclusion issued by the evaluation institution, the two parties to the transaction shall determine the total transfer price, and the assets can be delivered to normal use, At the same time, the acquired assets shall be paid off 12 months after putting into production and completing the production of the first vehicle on the market.
At present, the first phase of the transaction is 66.15 million yuan, and Liaoning Sg Automotive Group Co.Ltd(600303) has been paid.
related party acquisition triggered market disputes
It is noteworthy that Ruiqi M1 and Ruiqi X1 involved in this acquisition are two small fuel models developed and listed by Chery automobile from 2008 to 2012. They have been discontinued for many years. Many of the relevant patents have expired and the patent application time is relatively long. There is also great controversy in the market about Liaoning Sg Automotive Group Co.Ltd(600303) plans to develop pure electric vehicles with these two models, Once the acquisition announcement was disclosed, it received much attention.
On September 28, 2021, Shanghai stock exchange sent an inquiry to Liaoning Sg Automotive Group Co.Ltd(600303) asking the company to explain the basis and rationality of transaction pricing and whether it is delivering liquidity to the controlling shareholder and actual controller. On November 5, 2021, Liaoning Sg Automotive Group Co.Ltd(600303) just completed the reply to the previous inquiry, the exchange sent a regulatory letter again, requiring the company to protect the inquiry right of minority shareholders, hold an investor briefing, and demonstrate and study the necessity of submitting related party transactions to the general meeting of shareholders for deliberation in accordance with the principle of prudence. The company is required to carefully evaluate the rationality and necessity of the transaction, verify the fairness of the transaction price, fully listen to and respect the opinions of small and medium-sized investors, and carefully judge whether to continue to promote.
On December 6, 2021, the investment service center also sent a letter to the company jointly with Shenzhen Zhongneng green Qihang No. 1 investment enterprise (limited partnership) (hereinafter referred to as Shenzhen Zhongneng), Yu Jing, Jiang Pengfei and Liaoning Shuguang group, proposing to convene an interim Board of directors to review the relevant proposals put forward by five shareholders to submit the transaction to the general meeting of shareholders for deliberation. However, at the 42nd session of the ninth board of directors held on December 16, 2021, the joint proposal of five shareholders including the investment service center was directly rejected.
“The reason why minority shareholders are highly concerned about this acquisition is that the acquisition involves related party transactions and the two models involved are old, which is suspected of transferring interests and damaging the interests of minority investors.” Bai Wenxi, chief economist of IPG China, said in an interview with the Securities Daily, “after the proposal is rejected by the company’s board of directors, minority shareholders can also request to hold an interim and special shareholders\’ meeting to discuss this issue, as well as initiate rights protection litigation, report to the regulatory authorities and sell shares to have an impact on the acquisition.”
The reporter noted that after the joint proposal of five shareholders including the investment service center was rejected, Shenzhen Zhongneng and Yu Jing also submitted a proposal for the extraordinary general meeting of shareholders, nominated the list of candidates for the relevant board of directors and planned to participate in the change of the relevant board of directors and board of supervisors, but the relevant proposal was also directly rejected by the Liaoning Sg Automotive Group Co.Ltd(600303) board of directors.
acquisition is a key step in transformation
At the interim board meeting held on December 16, 2021, Hu Yongheng, the then chairman, who voted against the joint proposal of five shareholders, including the investment service center, said at that time that he believed that the transaction amount did not exceed 5% of the latest audited net assets, did not exceed the authority of the board of directors, and should not be submitted to the general meeting of shareholders for deliberation; This transaction is a crucial step in the company’s transformation to produce new energy vehicles, which can shorten the company’s vehicle mass production time and keep the production qualification of new energy vehicles that is very difficult to win; The independent director of the company hired a third organization to review the evaluation results, and the preliminary opinion is that the evaluation value is acceptable; This transaction does not provide liquidity for controlling shareholders and actual controllers.
At the investor briefing held on January 14, 2022, Gong Da, the current chairman of the company, said that compared with the billions of new energy product R & D investment of other new car making forces, the company considered seeking models with the least investment cost, controllable risk, shortest development cycle and relatively mature products and technologies. At the same time, Select the A00 new energy passenger car with the highest market capacity and rapid growth as the entry point, so as to complete the product development and listing of the company’s pure electric passenger car at a small cost.
In response to investor questions, Zhang Jie, chief engineer of the company, said that the appraisal expert group hired by the company’s appraisal organization had made technical appraisal and issued the appraisal opinions on the advanced technology of the body and chassis technology and the technology advancement, maturity and economy of the mould clamp assets.
The assets acquired this time are in good condition. In the early stage, the two models have been verified by product technology development, and the matching development of new energy pure electric has been completed. The two new energy passenger vehicle models have been tested and announced by the state. Mold assets have advanced nature. The mold assets remain intact and are currently available for use. The technology of relevant models is mature and stable. In the environment of A00 electric vehicle market growth, the company’s products have certain competitiveness and are expected to be recognized by the market.
senior management frequent resignation intermediaries withdraw first
The board of directors successively rejected the proposals of minority shareholders, and the first phase of the transaction payment has been paid to the account. Liaoning Sg Automotive Group Co.Ltd(600303) the related party acquisition has basically “cooked rice”. However, at this time, the evaluation agency hired by the company unilaterally terminated the evaluation contract and withdrew the evaluation report.
According to a recent announcement of Liaoning Sg Automotive Group Co.Ltd(600303) , the company received relevant letters from Beijing Zhuoxin Dahua Asset Appraisal Co., Ltd. (hereinafter referred to as Zhuoxin Dahua) on January 12, 2022. Zhuoxin Dahua said that due to the epidemic, it failed to implement all inventory procedures for some outsourced vehicle molds. According to the firm offer provided by the enterprise after the period, Some outsourcing molds are missing or cannot be recovered due to business disputes, which has a certain impact on the evaluation conclusion. At present, due to the impact of the epidemic, the evaluation procedure is limited and cannot be lifted. Now the evaluation organization will terminate the evaluation contract and withdraw the evaluation report.
” Liaoning Sg Automotive Group Co.Ltd(600303) This connected acquisition has attracted high attention, and evaluation is the key to transaction pricing.” Some market participants told reporters that at present, the supervision of intermediaries is also very strict, and relevant institutions are more cautious in practice.
For the temporary termination of the appraisal institution, Liaoning Sg Automotive Group Co.Ltd(600303) believes that the appraisal report originally submitted by Zhuoxin Dahua is legal and effective. The property rights of the assets acquired by the company are clear and the inventory results are clear, which can ensure the interests of the company, shareholders and shareholders. The company will also hire new institutions to re evaluate the acquired assets. Liaoning Sg Automotive Group Co.Ltd(600303) also said that it reserves the right to file a lawsuit through judicial procedures for the adverse impact and losses caused to the company by the unilateral termination of Zhuoxin Dahua.
It is noteworthy that not only the evaluation institutions, but also the directors and executives of Liaoning Sg Automotive Group Co.Ltd(600303) have frequently resigned in recent years. Since the disclosure of this related party acquisition, Xiao Jianing, the former Secretary of the board of directors, resigned quickly on December 1, 2021 for the reason of job adjustment only after taking office for more than three months. On January 7, 2022, Hu Yongheng, who has just been re elected for more than ten days, also resigned as a director for personal reasons. After his resignation, Hu Yongheng will not hold any position in the company.
The reporter checked the announcement and found that since 2019, Liaoning Sg Automotive Group Co.Ltd(600303) has disclosed up to 17 resignation announcements of directors, supervisors and senior executives. During this period, two chairmen resigned and one chairman changed after the normal change of office. In more than three years, three presidents, two chief financial officers, two vice presidents, three secretaries of the board of directors, three supervisors and one securities affairs representative resigned one after another for various reasons.
“Large scale changes in senior management and instability in management are taboos for any company.” The above-mentioned market people believe that the frequent changes of Liaoning Sg Automotive Group Co.Ltd(600303) management are not conducive to the implementation and implementation of the company’s business development strategy.
According to the publicly disclosed data, the operation of Liaoning Sg Automotive Group Co.Ltd(600303) has been difficult in recent years. Since 2012, the company’s net profit returned to the parent after deduction has been losing for nine consecutive years. In the first three quarters of 2021, the net profit returned to the parent after deduction has lost 220 million yuan. The annual loss in 2021 has also become a probability event.
“Although the company currently has a complete range of vehicle products, the company has invested less in new products in recent two years and its business is in a relatively declining state. Therefore, the company will successively launch modified new energy electric buses, hydrogen powered buses and modified pickups (including electric pickups) in 2022 And other models, laying a good foundation for the production and marketing breakthrough in 2022. Meanwhile, in 2021, the company has completed the technical research and development of aluminum alloy frame and is actively docking mass production business with mainstream new energy vehicle enterprises. The products with core technology, such as China’s advanced 4WD Electric drive axle and coaxial direct electric drive axle, which have been developed and completed by the company, have been supplied to the main engine factory in batches. ” At the investor briefing, Gong Da said, “the company will further expand its market share, tap its internal potential, optimize costs and costs, and strive to change the loss situation of its main business in the past Liaoning Sg Automotive Group Co.Ltd(600303) 10 years on the basis of existing business segments such as axle, pickup truck and bus.”
For the acquisition of Liaoning Sg Automotive Group Co.Ltd(600303) , Bai Wenxi believes that new energy vehicles are today’s tuyere. Vigorously developing the whole vehicle business of new energy vehicles will logically help Liaoning Sg Automotive Group Co.Ltd(600303) out of its business difficulties, but whether it can finally achieve the expected objectives remains to be verified by the results.
