China Science and Technology Construction Corporations debt puzzle: insiders exposed that more than 400 subsidiaries had a large number of affiliations

category:Finance
 China Science and Technology Construction Corporations debt puzzle: insiders exposed that more than 400 subsidiaries had a large number of affiliations


The new leading group of the company was established on October 1, 2014, according to the column of memorabilia on the official website of China Science and technology construction. At this time, Gu Weiguo was promoted from vice general manager to general manager.

In the next few years, China Science and technology construction ran with blindfolded eyes to raise funds as a state-owned enterprise in the capital market. Then, in May 2018, the capital chain suddenly broke, and the companys business was on the verge of collapse, leaving tens of billions of debts and a lot of feathers. So far, the process of cleaning up is still difficult.

Gu Weiguo, general manager of CSCEC, told 21st century economic news, we have a unified caliber for the College of surgery. At present, the pre reorganization is being carried out in an orderly manner. The detailed information has not yet been disclosed to the public, and the relevant information can also be announced to the media as soon as it is confirmed. .

China Science and technology construction manager also said that the plan is being developed, investors are also in contact, and it is still in the confidential stage. As for whether the pre reorganization will enter into the formal reorganization process, it needs to be decided by the creditors meeting.

In just over four years, China Science and technology constructions subsidiaries increased from 7 to 405, showing explosive growth. Figure visual China

Four years of extraordinary development

According to a PPN release material obtained by 21st century economic reporter, at the end of 2014, the total assets of China Science and Technology Construction Co., Ltd. were only 6.161 billion yuan, the total liabilities were only 3.714 billion yuan, and the asset liability ratio was 60.29%. As of the end of June 2015, there are 7 subsidiaries within the scope of the merger of China Science and Technology Construction Corporation, of which 6 are legal representatives of Gu Weiguo.

However, over the next few years, the company has made great strides along the way, relying on large-scale borrowing and rapid development, and its balance sheet has expanded rapidly.

According to the audit reports for the next two years, at the end of 2015, the total assets and liabilities of China Science and Technology Construction Co., Ltd. were 12.372 billion yuan and 9.029 billion yuan respectively. At the end of 2016, total assets expanded rapidly to 40.772 billion yuan and liabilities increased to 28.22 billion yuan. By the end of 2016, there were 20 subsidiaries incorporated into the consolidated statement of China Science and Technology Construction Corporation, an increase of 9 over the end of 2015.

By the beginning of 2018, the companys debt had reached 56 billion. According to Gu Weiguo, there are 178 financial institutions affected by the China Science and Technology Department, including many grassroots financial institutions and international banks such as Morgan Stanley.

On January 6, 2020, China Science and Technology Construction Corporation issued a notice that due to the breach of 15 China Science and technology construction ppn001 with a scale of 1.5 billion yuan, upon the application of creditors, on November 21, 2019, the third intermediate peoples Court of Shanghai has accepted the pre reorganization case of China Science and technology construction and Development Corporation, and Fangda law office is the administrator during the pre reorganization period.

At the meeting, it was also revealed that there are 448 holding and joint-stock companies under China Science and Technology Construction Co., Ltd. at all levels, presenting an umbrella structure with China Science and technology construction as the umbrella tip. Among them, 40 branches have not been cancelled, 405 subsidiaries at all levels, and 42 subsidiaries are set up under another operating subject of China Science and Technology Department, China Science and technology Jianfei Investment Holding Group Co., Ltd. (after penetration, it is 100% controlled by the Administration Bureau of the Chinese Academy of Sciences).

This means that from 2014 to 2018, in just more than four years, the debt of China Science and technology construction increased from 6 billion to 70 billion, a tenfold increase. Its subsidiaries increased from 7 to 405, showing explosive growth.

In the latest situation, Im afraid the manager hasnt found out the whole picture.

According to the information disclosed by the manager to the creditor, the audit institution gives a preliminary data after the verification of the financial data of the headquarters of China Science and Technology Construction Corporation and 23 branches. By the end of 2019, the total book assets of China Science and Technology Construction Co., Ltd. were 29.982 billion yuan, mainly including receivables and long-term equity investment, which totaled 27.864 billion yuan, accounting for 92.94% of the total book assets of China Science and Technology Construction Co., Ltd. At the same time, the total book liabilities are 36.137 billion yuan, and the owners equity is - 6.155 billion yuan. In addition, the asset liability data of 17 branches that have not been written off are still under investigation.

A large number of affiliated companies exist

Some insiders of China Science and Technology Construction Corporation disclosed to the 21st century economic reporter that the rapid development of China Science and Technology Construction Corporation has resulted in so many subsidiaries. In addition to some of them are acquired, many of them are external affiliated project companies. These companies are the subsidiaries of China Science and Technology Construction Corporation in name, but they are actually invested by others, that is, the actual controller or the actual investor (hereinafter referred to as the actual controller), not China Science and Technology Construction Corporation. The assets and operation of the company are generally controlled by the actual controller, but they will borrow the name of China Science and technology construction corporation or participate in project bidding, and some will also use a certain level of qualification of China Science and Technology Construction Corporation.

In this way, it seems reasonable to explain that, as the top holding company, China Science and Technology Construction Co., Ltd. has undertaken most of the liabilities and guarantee responsibilities of the group, while the core assets are mainly deposited in its subsidiaries. If the financing funds are actually used by the following subsidiaries (branches), but they are not paid when they are due, the pressure on China Science and Technology Construction Co., Ltd.s natural debt will increase dramatically.

At the first pre reorganization meeting, the manager of China Science and Technology Construction Corporation also said that due to various internal and external reasons, China Science and Technology Construction Corporation has no actual control over some branches and subsidiaries, or even does not know the financial and operating conditions of individual branches and subsidiaries.

According to its introduction, there are a large number of affiliated enterprises in CSCEC system. An audit report of China Science and technology construction also shows that as of the end of 2016, there are 55 investment companies not included in the scope of consolidation. Among them, 13 were established in 2017; 11 held less than 50% of the shares; another 24 did not actually fulfill their obligation of capital contribution; another 6 have made capital contribution, but they are on behalf of others; one has not fully paid the consideration.

According to reports, in addition to subsidiaries, some of the branches that are acting in a strange way do not exclude affiliation. For example, in a loan dispute judgment of a Western Branch, China Science and Technology Construction Co., Ltd. issued two different materials on whether it was the personal loan of the person in charge of the company or the loan of the branch. The first is the notice of entrusted collection of XX Branch of China Construction and Development Corporation, which is used to prove the entrusted collection, and then makes the opposite statement, which is called its loan.

In another phase of the branchs litigation judgment, it is also shown that in the litigation documents submitted to the court, the seals affixed by the company are inconsistent. In this case, three different seals were used, and other evidences also prove that multiple seals of the company were used at the same time.

As for the situation of affiliation, Gu Weiguo said in an interview with the 21st century economic report: there are historical problems, and later all affiliation subcontracts were cancelled.

In the first pre reorganization meeting, the manager once disclosed: on December 24, 2019, the manager took over some seals and licenses at the first time when he was stationed in China Science and Technology Construction Corporation. Up to now, the manager has received 89 seals and 57 licenses of China Science and Technology Construction Corporation (including branches). This also means that 40 branches and 405 subsidiaries at all levels of China Science and Technology Construction Co., Ltd., most of which have not submitted seals and certificates.

High financing consulting fee

In addition to the large-scale financing for borrowing new for old or acquisition project, some private enterprises or actual controllers who were eager for funds began to use the golden brand of central enterprises to Crazy financing after they were affiliated with the company.

According to the financing details obtained by 21st century economic reporter, by the end of 2018, the liabilities of the headquarters of China Science and Technology Construction Corporation were 4.126 billion yuan, and the financing costs ranged from 4.8% to 24%. Creditors include international banks such as Morgan Stanley, as well as domestic banks, trusts and financial leasing.

In addition, the branch company of China Science and technology construction also has a financing of 657 million yuan (possibly incomplete statistics). Among the financing of subsidiary companies, the financing guaranteed by China Science and Technology Construction Corporation is 3.227 billion yuan.

However, this data has not been confirmed by the official and manager of China Science and Technology Construction Corporation, which does not exclude some statistics.

Why do these financial institutions like CSCEC so much? Insiders said that in addition to the identity of enterprises owned by the whole people, there may be other potential rules for some financial institutions to unite intermediaries and people.

The actual operation is that the enterprise has negotiated the financing scale and conditions with the financial institutions, and then signed a financing advisory agreement with a third party to pay the corresponding fees according to the requirements of the relevant persons of the financial institutions, the person said.

For example, Zhu is the manager of the investment and Financing Department of a subsidiary of China Science and Technology Construction Corporation. In the process of handling the financial leasing business of China Science and Technology Construction Corporation and Taiping Petrochemical Financial Leasing Co., Ltd., through the intermediary of Liu, Zhu facilitated China Science and Technology Construction Corporation to sign the financial leasing contract with Taiping Petrochemical Company, financed 300 million yuan to Taiping Petrochemical Company in the form of financial leasing, and paid Give Taiping Petrochemical Company an annualized interest of 6% - 7%. Zhongkejian and its subsidiaries paid 18 million yuan to Liu, who then returned 6 million yuan to Zhu. Zhu was also sentenced to probation for bribery. Some banking analysts believe that under the name of state-owned enterprises, the willingness to pay higher financing costs, coupled with additional financial advisory fees, may be an important factor for China Science and technology construction to obtain huge financing. Source: responsible editor of 21st century economic report: Yang Bin_ NF4368

For example, Zhu is the manager of the investment and Financing Department of a subsidiary of China Science and Technology Construction Corporation. In the process of handling the financial leasing business of China Science and Technology Construction Corporation and Taiping Petrochemical Financial Leasing Co., Ltd., through the intermediary of Liu, Zhu facilitated China Science and Technology Construction Corporation to sign the financial leasing contract with Taiping Petrochemical Company, financed 300 million yuan to Taiping Petrochemical Company in the form of financial leasing, and paid Give Taiping Petrochemical Company an annualized interest of 6% - 7%. Zhongkejian and its subsidiaries paid 18 million yuan to Liu, who then returned 6 million yuan to Zhu. Zhu was also sentenced to probation for bribery.

Some banking analysts believe that under the name of state-owned enterprises, the willingness to pay higher financing costs, coupled with additional financial advisory fees, may be an important factor for China Science and technology construction to obtain huge financing.