ST Hailong purchased a game company for 3.3 billion yuan and made a big profit

The reporter found that behind this merger, there was a figure of Zhongzhi. The listing and gambling agreements signed by Zhongzhi Group with Miaoju Network and Shanghai Lingyu may have promoted the merger.

On January 13, *ST Hailong launched a reorganization plan. It will buy two online game companies for 3.3 billion yuan. The acquisition is led by Xingle Group, the new major shareholder of *ST Hailong. Previously, the former major shareholder China Hengtian had launched a plan to acquire medical assets.

This slightly hasty acquisition not only denied the original major shareholder's plan, but also violated the promise made by Xingle Group when it entered *ST Hailong.

* ST Hailong, which changed its "bride" three times within a year

and suspended its trading for three months, released a reorganization plan on January 13. It plans to acquire a 100% stake in Miaoju Network and Shanghai Lingyu for a total price of 3.338 billion yuan. Both companies specialize in online games.

In fact, when the suspension was suspended in October 2015 to plan for asset reorganization, *ST Hailong's reorganization target was not game assets. In November 2015, *ST Hailong issued an announcement stating that it planned to purchase all or part of Daji Kangming's equity by issuing shares to purchase assets. The latter is a medical device company.

At this time, it was only half a year since Xingle Group entered *ST Hailong. On May 27, 2015, *ST Hailong's controlling shareholder China Hengtian signed a share transfer agreement with Xingle Group. After the transfer was completed, the controlling shareholder of *ST Hailong was changed from China Hengtian to Xingle Group.

Data shows that Xingle Group is mainly engaged in the research and development, production, sales and service of wires and cables. At the time of the transfer, Xingle Group stated that after becoming the controlling shareholder of *ST Hailong, it will initiate asset injection reorganization planning in a timely manner based on its own strategy, and place Xingle Group's main business assets related to wire and cable and other high-quality assets into the listed company. It is not ruled out that it will continue to increase its shareholding in listed companies in the future.

By November 2015, *ST Hailong announced the acquisition of medical assets, which was inconsistent with the promise of the new controlling shareholder Xingle Group. The Beijing News reporter sorted out and found that the leading party in asset reorganization during this period may still be the original controlling shareholder China Hengtian.

According to the share transfer agreement signed between Xingle Group and China Hengtian, the transfer procedures should be completed no later than November 30, 2015. However, until the agreed transfer time, the parties had not yet reached an agreement on the equity pledge, and the equity transfer procedures had not been completed. However, China Hengtian seems to have expected it and prepared Daiki Kangming as a "substitute."

The reporter interviewed *ST Hailong about "Who was the leader of the two asset restructurings?" The staff said that the information was not within their understanding and did not answer. However, he confirmed that the equity transfer between China Hengtian and Xingle Group was completed on December 25, 2015, and the current controlling shareholder of the company is Xingle Group.

Zhongzhi Group "laid out" in advance

. More than half a month after Xingle Group became the controlling shareholder of *ST Hailong, on January 13, *ST Hailong announced that it would terminate the reorganization plan with Daji Kangming. At this time, *ST Hailong and Daiki Kangming had been communicating for nearly two months and conducted relevant due diligence.

*ST Hailong said that this is caused by the complex structure of Daji Kangming's red-chip. On the same day, *ST Hailong announced that it would change the reorganization target to two game research and development and operation companies, Miaoju Network and Shanghai Lingyu.

According to the reorganization plan, *ST Hailong plans to purchase 100% equity of Miaoju. com held by Wuhu Yishanrong and Jingjiang Meizhi for 1.724 billion yuan; at the same time, it will purchase 1.614 billion yuan for 100% equity of Shanghai Lingyu jointly held by Xizang Wanyu and Jingjiang Meizhi. The two transactions were at a premium of 11.8 times and 19.7 times respectively.

Jingjiang Meizhi is a common shareholder of the two acquisition targets. The Beijing News reporter inquired about information and learned that Jingjiang Meizhi only invested in the above-mentioned company shortly before this reorganization.

In April 2015, Miaoju Network shareholder Wuhu Yishanrong transferred its 3 million yuan capital investment to Jingjiang Meizhi at a price of 165 million yuan. After the transfer, Jingjiang Meizhi owned 25% equity of Miaoju Network; and in November 2015, Jingjiang Meizhi invested 448 million yuan and transferred 28% equity of Shanghai Lingyu.

Disclosure information shows that Jingjiang Meizhi "has a big background." Changzhou Jingjiang Capital and Changzhou Antong Capital hold 90% and 10% shares of Jingjiang Meizhi respectively. Jingjiang Capital was established 100% funded by Zhongzhi Capital Management Co., Ltd.

Zhongzhi Capital was established in 2011 and is a subsidiary of Zhongzhi Group. Its business scope includes equity investment in listed companies and integrated investment in industry mergers and acquisitions. This also means that Jingjiang Meizhi is a well-known member of the "Zhongzhi" in the capital market.

In the eyes of industry insiders, participating in the asset reorganization of listed companies, converting the equity held by non-listed companies into equity of listed companies, and improving their liquidity and liquidity are the usual methods for the capital operation of Zhongzhi Group.

"Zhongzhi is deeply involved in the capital operation of listed companies, but does not seek to become a controlling shareholder. It generally chooses to be a second shareholder or a high-ranking shareholder." A brokerage official told the Beijing News reporter. According to incomplete statistics, in the first half of 2015 alone, Zhongzhi relied on the above methods to intervene in seven listed companies, with a cumulative capital operation amount of nearly 8 billion yuan.

The "strict" gambling agreement behind the reorganization

is involved in this reorganization of *ST Hailong in this way. The reorganization plan shows that Jingjiang Meizhi will invest 200 million yuan to participate in the subscription of 18.52% of the fixed-added shares of *ST Hailong.

After the reorganization is completed, Jingjiang Meizhi will hold 15.07% of the shares of the listed company, becoming the second largest shareholder of *ST Hailong, only 5% of the equity difference from Xingle Group, the largest shareholder. * ST Hailong also mentioned that after the reorganization is completed, Jingjiang Meizhi will receive the right to nominate a non-independent director.

Miaoju Network and Shanghai Lingyu, which entered the game early in the Zhongzhi Department, were costly. Transferred a 28% stake in Shanghai Lingyu, the transfer price was as high as 1600 yuan/share. Based on this transfer price, Shanghai Lingyu's overall valuation is 1.6 billion yuan, which is close to the 1.614 billion yuan given by *ST Hailong this time.

On Miaoju Network, Jingjiang Meizhi spent 165 million yuan to obtain a 25% stake. In this reorganization transaction, the equity consideration for this part has reached 431 million yuan, that is, in less than a year, Zhongzhi's investment in Miaoju Network has increased by 266 million yuan.

In fact, when Jingjiang Meizhi became a strategic investor in Shanghai Lingyu and Miaoju Network in 2015, it signed listing and gambling terms with the two companies.

For example, Zhongzhi Capital, Jingjiang Meizhi and Shanghai Lingyu agreed that Shanghai Lingyu will complete its reorganization with a listed company before June 30 this year. If it is not completed, Zhongzhi Capital and Jingjiang Meizhi will have the right of redemption or sell their shares in Shanghai Lingyu to a third party.

The supplementary capital increase agreement signed by Zhongzhi Capital, Jingjiang Meizhi and Miaoju Network also has a gambling clause. If Miaoju Network fails to complete its reorganization with a listed company, listing on the New Third Board or IPO of A-shares within 18 months after Jingjiang Meizhi's capital contribution, Zhongzhi Capital and Jingjiang Meizhi will enjoy redemption rights.

The reporter also called Zhongzhi Group to interview about the gambling agreement, but after the reporter explained the reasons for the interview, its switchboard refused to interview because it could not be transferred to the relevant department.

A Miaoju Network executive told reporters in an interview that the company is in a period of silence and it is inconvenient to discuss this matter. As of press time, the reporter had not contacted Shanghai Lingyu.

Both game companies have made performance commitments of 100 million yuan.

If the two game companies are acquired by *ST Hailong as scheduled, *ST Hailong may see a turnaround. In the next few years, Miaoju Network and Shanghai Lingyu have both given high performance commitments.

The reorganization plan shows that Miaoju Network's net profits attributable to the parent company in 2013, 2014, and January to September 2015 were-3.53 million, 6.98 million, and 42.91 million respectively. Miaoju Network promises that its net profit in the next three years will be no less than 119 million yuan, 158 million yuan and 194 million yuan respectively.

The net profit of Shanghai Lingyu in 2013, 2014, and January to September 2015 was 31.21 million, 74.19 million, and 49.42 million respectively. It promises that its performance in the next three years will be no less than 114 million yuan, 152 million yuan and 185 million yuan respectively.

The reorganization plan shows that the two companies have games such as "Troubles in Heaven OL","Throne of Storms", and "Immortal War", which "have high market influence" and "have achieved good domestic operating results, while actively expanding overseas markets such as Southeast Asia, Europe and the United States""provide a guarantee for the healthy development of the future business."

The reorganization plan shows that if Miaoju Network and Shanghai Lingyu fail to fulfill their performance commitments in the future, relevant parties will compensate the listed company in the form of shares and cash.

If the above two game companies can fulfill their performance commitments, *ST Hailong will be "rescued".

*ST Hailong suffered a loss of 261 million yuan in 2013, a loss of 430 million yuan in 2014, and a continued loss of 246 million yuan in the first three quarters of 2015. In order to protect its shell, *ST Hailong once sold off loss-making assets with net assets of-172 million yuan at a price of 1 yuan, turning the company into a profit.

Regarding Xingle Group's commitment to inject wire and cable assets, and whether the listed company will transform in this direction after acquiring online game assets, *ST Hailong Securities Department staff told reporters that this involves issues related to the company's development strategy, and the assets of the controlling shareholder have not been injected now does not mean that it will not be injected in the future.

Zhongzhi Capital, Jingjiang Meizhi and Shanghai Lingyu agreed that Shanghai Lingyu will complete its reorganization with a listed company before June 30 this year. If it is not completed, Zhongzhi Capital and Jingjiang Meizhi will have the right of redemption or sell their shares in Shanghai Lingyu to a third party.

Editor: yvonne