Shanda Games shareholders are involved in multiple disputes, dragging down the privatization process

Shanda Games announced its privatization two years ago, but infighting among shareholders has made its return process confusing.

Shanda Games announced its privatization two years ago, but infighting among shareholders has made its return process confusing.

There are many Chinese stocks that have been privatized recently, but none of them have such twists and turns as Shanda Games.

Recently, after many days of silence about the recurring shareholder disputes, BOC Cashmere finally issued an announcement to clarify it. The announcement stated that the Yinchuan Municipal Public Security Bureau filed an investigation into Ma Shengguo, the actual controller of Zhongrong Group, its controlling shareholder, for suspected contract fraud, and subsequently froze the 10 million yuan investment of Ningxia Zhongrong Cultural Industry Equity Investment Enterprise, Ningxia Zhongrong Shengda Equity Investment Partnership, Ningxia Zhongrong Legend Equity Investment Partnership, Ningxia Zhongrong Summer Equity Investment Partnership, and Ningxia Vision Equity Investment Enterprise held by Ma Shengguo through Zhongrong Group. A total investment of 60 million yuan.

Currently, the matter filed is under investigation and has not yet been closed. The Yinchuan Municipal Public Security Bureau did not take any criminal coercive measures against Ma Shengguo due to this case, and it is not known whether the matter filed is related to Shanda Games privatization project.

Regarding the case that Shanghai Haode Asset Management Co., Ltd.(hereinafter referred to as "Shanghai Haode") sued Zhongrong Group and its legal representative Ma Shengming, Zhongrong Group applied to the court to terminate the civil trial originally scheduled to be held on December 28, 2015. The trial was approved by the court.

Shanghai Haode's lawyer said in an interview with a reporter from 21st Century Business Herald that the above news is true. "The progress in the next step is not yet certain. The court needs to judge whether Ma Shengguo's case has an impact on our prosecution."

In addition to disputes with investment institutions, BOC Cashmere has also been caught in a tug of equity war with Century Huatong. Industry analysis shows that no matter the final outcome of these two disputes, the privatization process of Shanda Games will be dragged down. The reason behind this is still due to the high valuation and returns brought by game companies in the A-share market, so that Shanda Games has become the "Tang Priest meat" that is being vying for.

Shareholders are in constant trouble,

BOC Cashmere said in the announcement that it has received lawsuits from Shanghai Haode and Ningxia Xiaoguang. Shanghai Haode requested to continue to perform the original agreement and complete the industrial and commercial registration procedures for its related party Shanghai Tangcheng Okai Yifu Investment Center to Ningxia Silk Road. The 1.1 billion yuan (not actually paid) limited partnership property share.

The lawsuit was originally scheduled to be publicly heard on the afternoon of December 28, 2015, but the trial was originally postponed. Shanghai Haode's lawyer told reporters that the reason given by the court was that Ma Shengguo, the actual controller of Zhongrong Group and former chairman of Ningxia Zhongyin Cashmere Co., Ltd., was criminally opened by Ningxia police on suspicion of contract fraud.

Dramatically, Yinchuan News Network released a piece of news on December 29, 2015. Guo Baichun, Vice Mayor of Yinchuan and Secretary of the Party Committee of BOC Cashmere Industry Co., Ltd., met with Zhang Yingfeng, Chairman of Shanda Games, and his party. Also participating in this event were Ma Shengming, Ma Shengguo and others.

Guo Baichun said that Shanda Games's return to the domestic capital market is something that investors have been waiting for a long time. We hope that Shanda Games and relevant parties will step up their efforts and return as soon as possible.

However, at the critical juncture of the handover, in addition to being sued by investment institutions and Ma Shengguo being investigated, the Hong Kong High Court also issued an "injunction", which led to the extension of Shanda Games 'board of directors.

On December 29, 2015, Shanda Games 'privatization consortium Capitalhold Limited (referred to as "CapitaLand Group") held a shareholders' meeting in Yinchuan. Shanghai Liyou Investment Management Co., Ltd.(referred to as "Shanghai Liyou") rushed to the scene with an injunction from the Hong Kong High Court and suspended the merger agreement and plan entered into by Ningxia Zhongyin Cashmere International Group (referred to as "Zhongrong Group") on the spot.

According to the announcement of BOC Cashmere Industry, Shanda Games Privatization Consortium has a total of 9 shareholding platforms. Zhongrong Group actually controls four of them and holds a total of 221,275,697 shares of Shanda Games, accounting for 41.19% of the total shares of Shanda Games, accounting for 46.66% of the total voting rights of Shanda Games.

Regarding the impact of this matter on BOC Cashmere Industry, the announcement stated that as of now, all shareholders of CapitaLand Group have not yet reached an agreement on Shanda Games 'subsequent capital operation, and the injunction and arbitration matters currently underway among shareholders are under trial. Therefore, the aforementioned matters will cause significant uncertainties in terms of time, progress, and specific plan content of the major matters that the company is planning.

Capital operation continues

It is reported that Shanghai Liyou issued a lawyer's letter to China Rongji Group at the shareholders 'meeting, informing China Rongji that the Hong Kong High Court has issued an injunction and will hold a hearing on January 8, 2016 to further handle the injunction.

The High Court of Hong Kong has issued an injunction against China Rongrong Group, China Rongrong Shengda Investment Holdings (Hong Kong) Co., Ltd. and China Rongrong Investment Holdings (Hong Kong) Co., Ltd., requiring the three parties in Ningxia to appear in court on January 8, 2016 to attend the hearing, and suspend any mergery-related activities (including convening a shareholders 'meeting to authorize, approve or accept the merger agreement) before this date.

In CapitaLand's shareholding structure, Zhang Yingfeng's one-person limited liability company indirectly holds approximately 37.01% of the voting shares, while the three Hong Kong SPVs hold approximately 16.33% of the voting shares. According to the plan of this shareholders 'meeting, Shanda Games' Love Assets will be transferred to NingxiaParent Limited in disguise, which is the newly established shell company of Zhongrong Group. Once the plan comes true, Shiji Huatong, a related party of Shanghai Liyou, may be eliminated.

Therefore, the purpose of Shanghai Liyou's application for an injunction to the High Court of Hong Kong is to prevent it from being unable to share the benefits of Shanda Games 'backdoor listing due to too few voting rights.

Shanda Games announced its privatization two years ago. After Giant Network had successfully listed on a shell A-share market, infighting among shareholders made its return process confusing.

Zhongrong Group stated that it has hired lawyers to verify and study the validity and probative power of the evidence submitted by Shanghai Liyou, and has taken active measures to safeguard the legitimate rights and interests of Zhongrong Group and related parties. And will continue to actively promote Shanda Games 'subsequent capital operations.

Editor: yvonne