The controlling shareholder of Dongzheng finance was ordered to withdraw the state-owned assets and planned to take over the offer

category:Finance
 The controlling shareholder of Dongzheng finance was ordered to withdraw the state-owned assets and planned to take over the offer


According to the agreement, joy capital conditionally agreed to sell and Xiamen Xinda conditionally agreed to purchase shares of China Zhengtong with 29.9% voting rights (equivalent to about 801 million shares of China Zhengtong) with a transaction price of HK $1403 million (equivalent to about HK $1.74 per share). The completion of the transaction depends on the achievement or exemption of the preconditions specified in the sale and purchase agreement.

If the transaction is completed, Xiamen Xinda will become the largest single shareholder and strategic investor of China Zhengtong, thus indirectly controlling Dongzheng finance. This means that Dongzheng finance will be offered by state-owned assets. Although the administrative license of the controlling shareholder of the company has been cancelled, its impact on the actual business is less than the impact on the value of the transaction. After receiving the offer from the state-owned assets, administrative permission and the like can also be applied for again.

It is reported that Xiamen Xinda is mainly engaged in information technology, automobile trade and supply chain business. The company was listed on the Shenzhen Stock Exchange in 1997 and is a core member of Xiamen International Trade Holding Group Co., Ltd. (hereinafter referred to as Xiamen International Trade Holdings). According to Tianyan information, Xiamen International Trade Holding Co., Ltd. holds 29.18% of the companys shares, while Xiamen International Trade holding company is 100% controlled by Xiamen SASAC.

Xiamen Xinda said that all parties to the agreement will work together to gradually improve and solve the liquidity problem of Zhengtong automobile. The liquidity problem of the company may be caused by poor diversification investment, the senior practitioners told reporters According to relevant data, in the first half of this year, Zhengtong automobile realized a profit of 9.241 billion yuan, a decrease of 46.98% over the same period of last year; the loss attributable to shareholders was 1.366 billion yuan, with a profit of 471 million yuan in the same period last year.

Dongzheng finance was established by Zhengtong automobile and Dongfeng Motor Co., Ltd. in March 2015, and was listed in Hong Kong in April last year. As of June 30, 2020, China Zhengtong holds 71.04% shares of Dongzheng finance. According to the administrative decision issued by Shanghai Banking and Insurance Regulatory Bureau, Dongzheng finance may have the problem of capital retransmission to major shareholders.

According to the administrative decision, since the opening of Dongzheng auto finance in March 2015, China Zhengtong and its related persons have carried out related party transactions with Dongzheng auto finance in violation of regulations, seriously endangering the steady operation of Dongzheng auto finance. In addition, China Zhengtong has set up Dongzheng auto finance by improper means, and has carried out related party transactions in violation of regulations, and the auto loan business of dealers has seriously violated the prudent operation rules.

In this regard, the Shanghai Banking and Insurance Regulatory Bureau has imposed penalties, mainly including revoking the administrative permission of Zhengtong holding, which is the controlling shareholder of Dongzheng auto finance, to limit the shareholders rights of Zhengtong holding, to order the shareholders equity of Dongzheng auto finance held by Zhengtong holding, and the interests obtained based on the administrative license are not protected The dealers automobile loan business seriously violates the prudent operation rules, and Dongzheng auto finance is ordered to suspend the auto loan business of dealers. It is understood that up to now, there are 25 auto finance companies in China. By the end of 2019, the asset scale of 25 companies reached 906.371 billion yuan, an increase of 8.03% year-on-year; in that year, the number of retail loan vehicles of auto financing companies was 6.646 million, accounting for 25.8% of Chinas automobile sales in 2019, with a year-on-year increase of 4.2 percentage points; and 4.198 million vehicles were granted by dealers, accounting for 16.3% of the car sales in 2019. (Intern Liu Tian also contributed to this article) source: first finance and economics editor: Yang Bin_ NF4368

In this regard, the Shanghai Banking and Insurance Regulatory Bureau has imposed penalties, mainly including revoking the administrative permission of Zhengtong holding, which is the controlling shareholder of Dongzheng auto finance, to limit the shareholders rights of Zhengtong holding, to order the shareholders equity of Dongzheng auto finance held by Zhengtong holding, and the interests obtained based on the administrative license are not protected The dealers automobile loan business seriously violates the prudent operation rules, and Dongzheng auto finance is ordered to suspend the auto loan business of dealers.

It is understood that up to now, there are 25 auto finance companies in China. By the end of 2019, the asset scale of 25 companies reached 906.371 billion yuan, an increase of 8.03% year-on-year; in that year, the number of retail loan vehicles of auto financing companies was 6.646 million, accounting for 25.8% of Chinas automobile sales in 2019, with a year-on-year increase of 4.2 percentage points; and 4.198 million vehicles were granted by dealers, accounting for 16.3% of the car sales in 2019.

(Intern Liu Tian also contributed to this paper.)