At the end of March, Wu Rui sent a number of real-name report letters to the Shanghai Stock Exchange, the Shenzhen Securities Regulatory Bureau and other relevant departments. The reporter learned that the core content of the reporting materials is that the whistleblower Shenzhen Hongyu Business Consulting Co., Ltd. (hereinafter referred to as "Shenzhen Hongyu") believes that the listed company Xinchao Energy (600777. SH) offshore oil and gas assets have been transferred.
According to Xinchao Energy's third quarter report in 2023, Shenzhen Hongyu is the tenth largest shareholder of the listed company, with a shareholding ratio of 1.45%. The above-mentioned whistleblower, Wu Rui, is the person in charge of Shenzhen Hongyu.
On April 17, Wu Rui told reporters that the company's choice to invest in Xinchao Energy is mainly due to oil and gas assets. In the subsequent post-investment management process, Shenzhen Hongyu found that the management and control of Xinchao Energy's overseas assets were transferred to Seewave Energy Holdings Company (hereinafter referred to as "Seewave Company"), and Liu Ke, the former chairman of the company, was the sole director, president and chief executive officer and authorized person of the company. Based on this, Shenzhen Hongyu believes that without any statutory decision-making and information disclosure procedures, Liu Ke actually controlled the overseas core assets of the listed company Xinchao Energy through a series of measures.
But New Wave Energy has a different set of narratives. The company told the Economic Observer that the so-called misappropriation of the assets of the listed company by the management as a private company is a completely false rumor, and it is a malicious attack on the listed company that was used by some personnel.
On the morning of April 18, Xinchao Energy issued an announcement on the reply to the regulatory work letter. According to Xinchao Energy, Seewave is a wholly-owned subsidiary of the company. Listed companies actually have the decision-making power over major matters such as the disposal and management of overseas assets. The executive director, president and chief executive officer of Seewave do not have the authority to make decisions on major matters such as asset disposal and dividends.
Due to the control of overseas assets involved, the incident caused by shareholder reports became a Rashomon in the case of opaque overseas industrial and commercial information.
Core assets are changing
The focus of this report is on the ownership of control of Xinchao Energy's core assets and overseas oil and gas assets.
Xinchao Energy was originally a listed company mainly engaged in real estate development and electronic components manufacturing.
Since 2013, the real estate company of Xinchao Energy Disposal has entered the oil and gas industry, and has successively acquired conventional oil fields in Crosby County, Texas, and shale oil and gas assets in Howard and Borden counties, and in 2021, Xinchao Energy further completed the acquisition of oil and gas from the Grenadier shale assets in Howard County, Texas, USA.
With the acquisition of the latter, Xinchao Energy has added about 65 million barrels of oil and gas equivalent in proven oil and gas reserves and about 9,000 barrels of oil and gas equivalent per day, thus entering the ranks of medium and large oil and gas companies in North America.
At present, overseas oil and gas-related assets are the core assets of Xinchao Energy.
According to Xinchao Energy's 2023 semi-annual report, the value of Xinchao Energy's overseas assets is RMB 33.847 billion, accounting for 99.91% of Xinchao Energy's total assets. According to the disclosure, the vast majority of Xinchao Energy's overseas assets are oil and gas assets.
It is worth mentioning that Xinchao Energy rarely mentions the equity structure of the above-mentioned core overseas assets. The reporter flipped through the announcement and found that Xinchao Energy only disclosed the structure of relevant assets once in 2017.
On December 8, 2017, Xinchao Energy completed the integration and adjustment of the overall structure of its overseas subsidiary.
In the picture, Dingliang Huitong has been renamed Ningbo Dingliang in 2023
In the structure disclosed at that time, Xinchao Energy established wholly-owned subsidiaries in the United States, Xinchao U.S. Holdings Company and Surge Energy U.S. Holdings Company (hereinafter referred to as "Surge Energy"), as Hoople oilfield assets, Overseas integration platform for Howard and Borden field assets.
After the completion of the restructuring adjustment, Xinchao US Holding Company directly holds 100% of the equity of Surge Energy, and Surge Energy directly holds 100% of the equity of Moss Creek Resources Holdings, Inc. and Surge Operating, LLC.
The core task of controlling the above-mentioned offshore assets is carried out by the two domestic companies. The two companies are Ningbo Dingliang Huitong Equity Investment Center (Limited Partnership) (later renamed Ningbo Dingliang Enterprise Management Partnership (hereinafter referred to as "Ningbo Dingliang")) and Zhejiang Benbao Enterprise Management Co., Ltd. (hereinafter referred to as "Zhejiang Benbao"), with a shareholding ratio of 79% and 21% respectively.
For the more important Ningbo Dingliang, Xinchao Energy has a wholly-owned subsidiary, Yantai Yangfan Investment Co., Ltd. (hereinafter referred to as "Yangfan Investment"), as its general partner, and the company itself as a limited partner of Ningbo Dingliang.
Therefore, Yangfan Investment plays a key role in the core asset control chain of Xinchao Energy.
But in March this year, Wu Rui found that Yangfan Investment was no longer the general partner of Ningbo Dingliang. The general partner of Ningbo Dingliang has become a U.S. company, Surge Energy Capital Holdings Company ("SEC"). This company has never been present in the architecture of New Wave Energy before.
Wu Rui told reporters that on March 4 this year, Shenzhen Hongyu found that a series of huge adjustments have occurred in the aforementioned core asset control structure through the archives of the Market Supervision and Administration Bureau of Beilun District, Ningbo City.
Among them, there are too many undisclosed information about New Wave Energy.
According to the industrial and commercial information provided by Wu Rui, on May 5, 2023, all partners of Ningbo Dingliang signed a change decision, agreeing that Yangfan Investment will transfer 0.01% of the property share of Ningbo Dingliang (subscribed capital contribution of 1 million yuan) to the SEC, and at the same time re-enter into a new partnership agreement.
On May 8, 2023, Ningbo Dingliang made a number of amendments to the original partnership agreement, granting all decision-making rights, management rights, dividend rights and asset disposal rights to the SEC of the United States.
Only one month later, the SEC transferred all of its shares in the general partner of Ningbo Dingliang to the aforementioned Seewave, and Seewave obtained all the rights obtained by the SEC.
Since companies are allowed not to disclose shareholder information in the United States, Wu Rui has no way of knowing the shareholder information of Seewave. According to the industrial and commercial information obtained from the Ningbo Market Supervision and Administration Bureau, the sole founder of Seewave is a natural person, Jason Staller.
At the same time, according to the business information of Seewave, Liu Ke is the sole director, president and chief executive officer and authorized person of Seewave.
Control Rashomon
In Wu Rui's view, although the equity of Seewave has not yet been clarified, combined with the aforementioned series of changes and Liu Ke's role in Seewave, Liu Ke has absolute control over the company.
Zheng Jianou, a lawyer at Beijing Hairun Tianrui Law Firm, said that Seewave's industrial and commercial documents show that Liu Ke is the sole director, chief executive officer and president of Seewave, and is also the authorized person. This reflects the importance of Ke Liu in Seewave and the control he has over Seewave. On the other hand, in the Chinese legal environment, Seewave is the GP of Ningbo Dingliang, and according to the partnership agreement, Ningbo Dingliang's management rights, asset disposal rights, and profit distribution rights are all enjoyed by Seewave.
Zheng Jianou said that Liu Ke has a series of special identities in Seewave, which can exert control or at least significant influence on Seewave's business decisions, and that he is also the appointed representative of Ningbo Dingliang's executive partner, and he also has the right to execute partnership affairs such as Ningbo Dingliang's business management, asset disposal, and profit distribution under the Chinese law environment and under the partnership agreement.
Shenzhen Hongyu believes that with the active cooperation of the board of directors of Xinchao Energy led by Chairman Liu Bin, Liu Ke only obtained the management and control of Xinchao Energy's 33.847 billion yuan of assets in the United States through Ningbo Dingliang at the cost of subscribing to the registered capital of 1 million yuan.
The Shanghai Stock Exchange has apparently reacted to Shenzhen Hongyu's report.
According to the announcement of Xinchao Energy on April 18, on April 12, the listed company has received a regulatory work letter from the Second Department of Management of Listed Companies on the Shanghai Stock Exchange on matters related to complaints.
Xinchao Energy said in the reply letter that Yantai Yangfan, SEC and Seewave are all wholly-owned subsidiaries of listed companies, and the transfer of partnership shares between them is only an internal adjustment of the company's equity structure, whether before or after the adjustment, the listed company has always held 100% of the equity of Ningbo Dingliang, and Ningbo Dingliang has always been a wholly-owned subsidiary of the listed company, which will not affect the effective control of the listed company over Ningbo Dingliang, nor will it have any adverse impact on the subsequent operation of the listed company.
Wu Rui said, "As for the shareholding structure of overseas companies, Xinchao Energy has never disclosed. This part will not be known until the subsequent material documents of the listed company are disclosed. However, the aforesaid series of actions such as the revision of the terms of the partnership agreement, the change of industry and commerce, and Liu Ke's appointment as the sole director of Seewave are very clear. Liu Ke's shares in listed companies held by some companies have been auctioned, and judging from public information, he no longer owns shares in listed companies, so Liu Ke controls the assets of listed companies in this way."
Wu Rui also added that since the listed company only discloses information about the top 10 shareholders, it is not known whether Liu Ke still holds a personal stake or holds a small number of shares through other means.
It is understood that in November 2021, Liu Ke was investigated by the Muping County Public Security Bureau of Yantai City, Shandong Province on suspicion of embezzlement and other crimes against Xinchao Energy. On February 28, 2023, Xinchao Energy was re-elected as a new board of directors, and Liu Ke's brother Liu Bin was elected as the chairman, legal representative and general manager of the listed company. According to people familiar with the matter, Liu Ke is currently in the United States.
Wu Rui said: "Liu Ke does not have the qualifications for directors, supervisors and senior executives in China, so he went abroad to control this part of the assets, and the listed company does not announce these changes, which makes no sense." ”
As for the reason for not disclosing relevant information, Xinchao Energy explained that according to the relevant provisions of Article 6.1.22 of the Rules for the Listing of Stocks on the Shanghai Stock Exchange, "the transactions between a listed company and its holding subsidiaries and other entities controlled within the scope of the consolidated statements, or between the above-mentioned holding subsidiaries and other entities controlled, may be exempted from disclosure and performance of corresponding procedures in accordance with the provisions ......of this chapter", and Yantai Yangfan, SEC and Seewave are all listed companies within the scope of consolidation and 100% The foregoing provisions may apply to the holding subsidiary.
In addition, Xinchao Energy also claimed that the two share transfers were based on the original value of 1 million yuan, which did not meet the relevant disclosure standards. Based on the concerns of the market and regulatory authorities, the company intends to make relevant disclosures to clarify in the recently disclosed 2023 annual report.
As for why the internal adjustment of the shareholding structure was carried out, Xinchao Energy said that the historical legacy problems before 2018 led to a series of risks for the company to face directly at the beginning of 2023. After careful consideration, and based on the provisions of Articles 67 and 68 of the Partnership Enterprise Law, the management of the Company decided to maintain the Company's 100% control over the U.S. subsidiaries and oil and gas assets without triggering changes in assets and liabilities, and to reasonably construct a legal barrier through the fine-tuning of the equity structure within the scope of the consolidated financial statements, with minimal changes and costs, to prevent the Company from losing control of Ningbo Dingliang and even its U.S. subsidiaries and U.S. oil and gas assets, and to ensure the stable control of the listed company's overseas core assets. Safeguard the interests of listed companies and all small and medium-sized shareholders.
However, as of now, the market has not seen detailed supporting information on the content of the listed company's announcement.