On October 21, *ST King Kong (300064.SZ) announced that it had received a letter of concern from the Shenzhen Stock Exchange. The letter of concern unveils the issue of de facto control of the public company, which is teetering on the brink of delisting.
According to the previous announcement, the shares delivered by Henan Huajing Superhard Materials Co., Ltd. (hereinafter referred to as "Henan Huajing"), the controlling shareholder of *ST King Kong, to Shanxi Securities Co., Ltd. (hereinafter referred to as "Shanxi Securities") were transferred on October 18.
With the completion of the transfer of the above shares, the actual control of the listed company has become more and more confusing. At present, henan Huajing's shareholding in listed companies is less than 5%, only 4.22%; * Guo Liuxi, chairman of ST King Kong, holds 185 million shares of the company, with a shareholding ratio of 15.37%. In other words, Henan Huajing and Guo Liuxi hold a total of 236 million shares, accounting for 19.58% of the company's total share capital, less than 20%.
The letter of concern of the Shenzhen Stock Exchange pointed out three major issues: whether the controlling shareholder and actual controller of *ST King Kong changed after the delivery of the above shares, and whether the control of the company was stable; the progress of the current election of the board of directors and the board of supervisors of the company; the reasons for the failure to perform the information disclosure in a timely manner after the court ruling was made, and whether the relevant provisions on information disclosure were violated.
At present, *ST King Kong third quarterly report disclosure is imminent, according to the first financial reporter, the company's operating status or make it into a negative equity situation within the year. The deteriorating fundamentals of listed companies not only make the market value of state-owned shareholders shrink continuously, but more importantly, the delayed election of the board of directors has made state-owned shareholders powerless to get the company's operation back on track.
Whose *ST King Kong?
The reason for the shenzhen stock exchange's letter of concern is the change of interests disclosed by *ST King Kong on the evening of October 19. According to the announcement, the Intermediate People's Court of Zhengzhou City, Henan Province, issued an enforcement ruling on August 24, 2021 [(2020) Yu 01 Zhi No. 1343 ter], ruling that Henan Huajing held 94.4 million shares of the company's shares for 213 million yuan, and delivered Shanxi Securities to meet some debts, and the ownership of the above shares was transferred from the time the ruling was delivered to Shanxi Securities.
It is worth mentioning that *ST King Kong also announced that Luo Yuanyuan resigned as the company's securities representative for work reasons.
According to the financial report, as of June 30, Guo Liuxi indirectly held 12.05% of the company's shares through Henan Huajing, and directly held 15.37% of the company's shares, totaling 27.42% of the company's shares.
After the above-mentioned equity change, Henan Huajing and its co-actor Guo Liuxi held a total of 236 million shares in the company, and the proportion of shares held in the total share capital of the company fell to 19.58%.
According to the shareholding ratio of the company's top ten shareholders as of June 30, Xinghan Asset Management - Xingkaiyuan No. 8 Single Customer Special Asset Management Plan (hereinafter referred to as "Xinghan Asset Management") holds 322 million shares of ST King Kong, with a shareholding ratio of 26.7%, and since entering the listed company's shareholder register at the end of 2020, the number of shares held by Xinghan Asset Management has not changed, and it is currently the largest shareholder of the listed company. At present, the market value of listed companies held by Xinghan Asset Management has shrunk by nearly 70% compared with the cost.
This means that only from the perspective of the proportion of shares held, the number of shares held by Xinghan Asset Management has exceeded the total number of shares held by Henan Huajing and its co-actor Guo Liuxi.
*ST King Kong said in the previous announcement that the company's controlling shareholder is Henan Huajing, and the actual controller is Guo Liuxi. According to the 2021 semi-annual report, Guo Liuxi is the actual controller, chairman of the board of directors and secretary of the board of directors (acting) of *ST King Kong.
The letter of concern requires *ST King Kong to explain whether the controlling shareholder and actual controller of the company have changed, the specific basis for determination and its reasonableness, and whether the control of the company is stable, taking into account the company's equity structure, board seats, actual operating control, shareholders' shareholding purposes and article 84 of the Measures for the Administration of Takeovers of Listed Companies.
The original board of directors expired for more than a year, why was the election delayed?
According to the previous investigation results of the CSRC, Guo Liuxi embezzled a total of 3.169 billion yuan of listed companies' funds and illegally guaranteed 4.132 billion yuan, and it is difficult to resolve the risk without clearing and recovering.
The article "Exclusive | * ST King Kong Fraud Severely Punished, State-owned Shareholders Reporting the "Hollowing" Behavior of the Actual Controller" published by CbN on September 8 pointed out that since the beginning of this year, because Guo Liuxi is also concurrently serving as the secretary of the board of directors of * ST King Kong, when other shareholders plan to independently convene a shareholders' meeting to implement re-election of the board of directors and the board of supervisors whose term of office has expired, Guo Liuxi refused to issue relevant announcements, refused to hold a shareholders' meeting and did not re-elect, resulting in the re-election of the company's board of directors has not been fruitful.
Therefore, the election of the board of directors of *ST King Kong is directly related to whether the listed company can be pulled back from the "edge of delisting".
The first financial reporter interviewed a number of *ST King Kong shareholders, some shareholders saw that the assets of listed companies continued to be encroached upon very worried, felt that it was incredible during the launch of the crackdown on securities violations, it was against the wind and illegal, while inspecting and encroaching. In view of the fact that the actual controller has violated many provisions of the Criminal Law, some shareholders have called on the local government of the listed company and relevant departments to pay attention to the legal business environment and fully cooperate to deal with risks.
In addition, *ST King Kong's reply to the letter of regulatory concern from the Henan Securities Regulatory Bureau disclosed on May 25, 2021, said that the company will establish a sound and effective communication mechanism with major shareholders, strengthen exchanges and consultations, coordinate the time to give enterprises to operate steadily and resolve risks, smooth transition, shelve differences, jointly discuss fair, just and beneficial to the company's development of risk mitigation and election plan, and implement the election as soon as possible.
But *ST King Kong did nothing. According to the articles of association, the term of office of directors and supervisors is three years. According to the announcement, the fourth board of directors and the board of supervisors of *ST King Kong have been elected for three years since July 4, 2017, and have exceeded one year. However, as of now, *ST King Kong has not issued any announcement related to the election of the board of directors.
It is worth noting that among the top ten shareholders of *ST King Kong, Xinghan Asset Management holds 26.7%, Henan Agricultural Investment Financial Holdings holds 7.42%, and Bank of Zhengzhou holds 7.83%. The total shareholding ratio of these three state-owned shareholders has exceeded 40%, far exceeding the total shareholding ratio of Henan Huajing and its co-actor Guo Liuxi by 19.58%.
The letter of concern requires the company to explain the progress of the election of the company's board of directors and board of supervisors so far, and the specific work and timing of related matters.
*ST King Kong is suspected of information disclosure violations
According to the announcement, the Intermediate People's Court of Zhengzhou City, Henan Province, made the above-mentioned ruling on the delivery of shares as early as August 24 this year.
The first financial reporter combed the announcement and found that the court ruled that the 94.4 million shares held by Henan Huajing were delivered to Shanxi Securities to pay off part of the debt, and transferred to the Shanxi Securities - Bank of Zhengzhou Co., Ltd. - Shanxi Securities Ruichuang No. 1 directional asset management plan.
The reason for the equity payment was a contract dispute between Shanxi Securities and Henan Huajing, Zhengzhou High-tech Enterprise Accelerator Development Co., Ltd., Guo Liuxi and Zhengzhou Huajing.
However, for the equity transfer that was ruled at the end of August, *ST King Kong did not disclose it in time, but only recently disclosed the delivery of shares.
The Shenzhen Stock Exchange requires the company and relevant shareholders to verify and explain the reasons for the failure to perform information disclosure in a timely manner after the court ruling is made, and whether it violates the relevant provisions on information disclosure.
As of the latest close, *ST King Kong's share price was reported at 1.9 yuan, with a total market value of 2.3 billion.