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.

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.

In the process of rapid development of China Science and technology construction, all kinds of funds swarmed in, including bank loans, non-public directional debt financing tools (PPN), leaseback after sale, debt transfer and repurchase, trust, private placement, P2P, and even private lending. As long as the way of financing money, regardless of the price, the company dared to use it.

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.

On April 16, the first creditors meeting of China Science and technology construction pre reorganization case was held. The 21st century economic reporter once exclusively learned that from January 2 to March 26 this year, the manager received 740 claims, involving 2035 creditors, involving a total amount of 69.923 billion yuan. However, of the 70 billion yuan declared (not excluding repeated declarations), nearly 50 billion yuan has not yet been matched with the corresponding standing book of China Science and Technology Construction Corporation.

To this end, the administrator said: we have already consulted with other companies, some of the principal debtors are not us, and we have consulted with the financing parties and guarantors. At present, we have not issued the first batch of debt confirmation forms.

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.

As for many subsidiary companies, the manager of China Science and Technology Construction Corporation said that there are only more than 40 first level subsidiaries of China Science and Technology Construction Corporation, and more than 400 are subsidiaries of subsidiaries and other possible joint-stock companies. However, subsidiaries are legally independent.

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

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 natural debt pressure of China Science and Technology Construction Co., Ltd. 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 this person, the reason why private enterprises seek to join the central enterprises is mainly to borrow the name of the central enterprises. SOEs have a stronger ability to coordinate external resources and are more likely to get projects. The financing of state-owned enterprises is also relatively easier. The financing scale of private enterprises is limited and the high cost is not necessarily available.

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; and 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.

The manager said that the situation of affiliation needs further investigation.

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.

Among the subsidiaries of China Science and Technology Construction Corporation, the outstanding financing scale is 7.922 billion yuan, and the financing channels are more diverse. For example, Shanghai Zhongke Kechuang Culture Group Co., Ltd., a subsidiary of Zhongke haofei, once borrowed short-term loans from a garden company and an individual at an annual interest rate of more than 72%, and also financed private funds at an interest rate of 14% - 15%. Fujian Haixi Zhongke Construction Co., Ltd. also used to borrow money from individuals at a daily interest rate of 0.23% from small loans.

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. It is not excluded that it is part of the 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.

According to an insider involved in the financing process of CSCEC, many financial institutions need to collect tens of millions of yuan of financial consulting fees from third parties for financing of hundreds of millions of yuan. For example, a branch of China Science and technology construction needs to pay a financial consulting fee of nearly 12 million yuan to a third-party intermediary while financing a trust company of 300 million yuan.

A subsidiary of China Science and Technology Construction Co., Ltd. needs to pay a consulting fee of 12 million yuan to an intermediary while financing 600 million yuan to financial institutions.

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.

According to a judgment obtained by the 21st century economic reporter through the official document website, even the personnel in charge of financing of China Science and Technology Construction Corporation will collect kickbacks from the Financing Consultant Fee.

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

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.