Mortgage stock survey・2｜Several listed company shareholders recover cross-border documents and reveal the connections behind

A mainland real estate businessman came to Hong Kong to file a claim for shares of Bohai Bank (9668) pledged to an overseas financing institution.

"Hong Kong 01" reviewed court documents and found similar cases, including Datang Real Estate (2117), China Metal Utilization (1636), the delisted Cangnan Instrument (1743), and the Singapore-listed mainland private company Zhongsheng Group (5GD. SGX), major shareholders have filed a lawsuit against the lending company and the custodian company, claiming that after the stock mortgage loan, they could not get the loan, let alone get the stock back.

Among the listed companies involved, some of the prosecutors are even the company’s chairman or the largest shareholder, and some of the stocks have been sold off sharply, causing a sharp drop of 90% in the short term.

The U.S. court documents even disclosed some of the custody agreement, and it also brought out a number of different overseas loan companies, which were originally related.

Related companies have been put on a warning list by the Securities Regulatory Commission of British Columbia, Canada, and directors have also been sued by many investment banks in the United States.

01 Investigation series reports:

Mortgage stock survey・1｜Mainland real estate businessmen’s financial difficulties and financing personally describe the way to come to Hong Kong to file a claim

Mortgage stock survey・2｜Several listed company shareholders recover cross-border documents and reveal the connections behind

The reporter of "Hong Kong 01" searched a large number of documents in Hong Kong, the United States, Singapore and the island countries of Central America and found that several shareholders of listed companies in Hong Kong were unable to obtain loans and retrieve their shares after collateralizing their stocks. They filed a lawsuit against the loan company and the custodian company. .

(Photo by Luo Guohui)

"Hong Kong 01" compared the court records of the United States, Hong Kong, and Central American island countries, and found that shareholders of listed companies who filed for mortgage claims, held shares including Bohai Bank (9668), Datang Properties (2117), and China listed in Hong Kong. Metal Utilization (1636) and shareholders of the delisted Cangnan Instrument (1743); Singapore-listed mainland company Zhongsheng Group (5GD.SGX); and London, Sweden, and Thailand listed companies.

Part of the litigation information and facts of the stock pledge fraud case:

Wu Di is the chairman of Datang Real Estate.

(Datang Real Estate website)

Involved company stocks: Datang Real Estate (2117)

Holder: Chairman Wu Di (holding 15.91%

of shares

)

Involved shares: about 133 million shares; market value at the time: about 600 million Hong Kong dollars.

Allegation: No loans were received after the stocks were transferred;

Time when the

stock was transferred

out: August and September 2021

China Metal Utilization, the stock price plummeted by 90% in mid-2020.

(01icon)

Involved company stocks: China Metal Utilization (1636)

Shareholder: Quaestus Capital Pte Ltd, a shareholder who holds more than 10%

of the shares. Involved shares: about 154 million shares; market value at the time: about 460 million Hong Kong dollars.

Allegation: Want to borrow about 500 million Hong Kong dollars; rollover After that, the stock price fell by up to 92.4% in a single day; the stock price plummeted and required the increase of collateral; the sky-high price break-up fee; the custody stock was transferred out of

filing time: June 2020, August, February 2021

Mr. Huang, a mainland real estate businessman who mortgaged the stocks but was unable to get the stocks back, thought he had fallen into a trap.

(Photo by Lao Xianliang)

Involved company stock: Bohai Bank (9668) Holder

: Mainland real estate businessman Mr. Huang

Involved shares: about 32.29 million shares; market value at the time: about 100 million Hong Kong dollars

Allegations: To borrow about 65 million Hong Kong dollars, only received about 14 million Hong Kong dollars; After the transfer, the collateral is added, otherwise no loan will be issued; the break-up fee is about 23.4 million Hong Kong dollars; the custodial stock is transferred away.

Filing time: August 2021

Cangnan Instruments will be listed in Hong Kong in 2019 and will be delisted in 2021.

The picture shows the press conference before listing in 2018.

(Profile Picture / China News Agency)

Involved company stocks: Cangnan Instrument (No. 1743 before delisting)

Shareholders: the third largest shareholder Xi Deping and the other three

involved shares: about 6.27 million shares; then market value: about 360 million Hong Kong dollars

Allegations: want to borrow about 230 million Hong Kong dollars, Only received about 21 million Hong Kong dollars; after the stocks were transferred, the alleged shares were suspicious, and no loans were issued; about 54 million Hong Kong dollars were requested for the break-up fee; the custodial stocks were transferred away.

Filing time: July 2020

The major shareholder and chairman of the Singapore-listed Zhongsheng Group is Guo Hongxin.

(Zhongsheng Group website)

Involved company stocks: Zhongsheng Group (Singapore stock code: 5GD.SGX)

Shareholders: Major shareholder and chairman Guo

Hongxin

, and vice chairman Ma Ming

Involved shares: 28 million shares; market value at the time: approximately 48 million Hong Kong dollars

Allegation: want to borrow Approximately 23.4 million Hong Kong dollars; the stock fell 94% within ten days after the transfer to the custodian; the mortgage was added, or the break-up fee was approximately 9.75 million Hong Kong dollars.

Time of filing: 2019 (filed in Saint Kitts and Nevis)

Note: The aforementioned filing documents involve five loan companies, of which at least four are related; the other involves two custodian companies and the directors are related.

Source: Hong Kong, United States, Saint Kitts and Nevis court documents

Many shareholders of listed companies filed with the High Court, hoping to get back their mortgaged stocks.

(Information Picture / Photo by Lu Yiming)

Alleged that the stock was rolled over at a sky-high ``breakup fee''

The shareholders in these cases, including the major shareholders of the listed company, and even the chairman of the board, all charged similarly, claiming that the lender had solicited on favorable terms, and after the borrower transferred the shares to the custodian, the lender and the custodian requested additional charges for different reasons. The collateral, and even the sharp sell-off of stocks in the market, caused stock prices to plummet and the market value of mortgage stocks also plummeted.

The lender also calculates the "break-up fee" based on the proportion of the maximum loan that can be approved, rather than the actual amount the borrower wants to borrow, making the "break-up fee" a sky-high price.

The agreement also authorizes the custodian to use the shares to transfer part of the shares to overseas brokerage accounts.

U.S. court documents disclosed the custody agreement for major shareholders of Hong Kong listed companies to pledge their shares.

The picture shows the signature of Wu Di, Chairman of Datang Real Estate.

(Photo by Luo Guohui)

U.S. court records reveal multiple loan companies are connected

The defendant in some cases was a company "Company A" registered by the Central American island country "Saint Christopher and Nevis".

According to the business registration of the Ministry of Finance of Saint Kitts and Nevis, the director of "Company A" is named an American Ukrainian; the Hong Kong registered company "Company M" is the defendant in another case, and the director is also the same person. Register with a U.S. passport and address.

In addition, the defendant’s loan companies also included "Company B", "Company E", and "Company U".

Many court records in the United States have even revealed that many of the loan companies are connected.

"Company A" claimed to have an office in the Island East Center, but the site was a shared office, and the staff stated that there was no such company.

(Photo by Lao Xianliang)

U.S. lending company sues custodian

A total of 35 companies including "A company", "B company" and "U company", together with 3 Ukrainian citizens, filed a lawsuit against 11 individuals or companies in the Southern District of New York, including two Canadian-registered "W companies" The company accused it of breaching the entrustment agreement with losses of more than 450 million U.S. dollars (about 3.51 billion Hong Kong dollars), and demanded repayment of stocks and compensation for a total of 1.38 billion U.S. dollars (about 10.764 billion Hong Kong dollars).

However, the judge believed that the US court lacked jurisdiction and refused to issue the order.

Many shareholders of listed companies filed with the High Court, hoping to get back their mortgaged stocks.

(Profile picture / photo by Liang Pengwei)

Behind the scenes American Ukrainians have been involved in multiple lawsuits

According to U.S. court documents, the Ukrainian-American directors of "Company A" and "Company W" were accused of misappropriating "Lehman Brothers", "Rothschild" and "New York Stock Exchange". "(NYSE), etc., set up financial companies with the same or similar names, set up websites, and insinuate the relationship with genuine companies.

"Company A" was also included in the warning list by the Securities and Futures Commission of British Columbia, Canada. It stated that the company claimed to have an office in British Columbia and provided wealth management and consulting services. However, the authorities warned that "Company A" was not in British Columbia. Poetry is engaged in the registration of trading, securities, derivatives and other services.

The website of "Company A" reported that the Hong Kong office was located on the upper floors of Island East Center, Taikoo Place. The site was a shared office. The staff said that the company had never worked there.

The "W Company" website reported that the Hong Kong office was located on the middle floor of the Wharf Telecommunications Center in Harbour City, Tsim Sha Tsui. The site was the office of Centaline Properties. The staff said that no "W Company" had ever worked there.

(Photo by Lao Xianliang)

Two escrow companies: no comment on entering the judicial process

The "W Company" registered in Hong Kong and the Mainland respectively has related companies of the same name. The directors of the Mainland company are also the directors of the Hong Kong registered "Z Company".

The "W Company" website reported that the Hong Kong office was located on the middle floor of the Wharf Telecommunications Center in Harbour City, Tsim Sha Tsui. The site was the office of Centaline Properties. The staff said that no such company had ever worked there.

When “W Company” replied to the enquiry through a lawyer, it said that it understood the purpose of the email sent by the reporter, but it was inconvenient to comment because the case entered the judicial process.

The staff of "Z Company" stated that they did not comment on the incident due to entering the judicial process.

The reporter also inquired with the listed companies involved, but no reply was received before the deadline.

As the current court documents only disclose the petition, it is still not possible to know the details of the stocks involved, and there is no date for the hearing of the relevant cases.

Hong Kong is an international financial center, and insiders remind investors to be careful and shrewd.

(Information Picture / Photo by Luo Junhao)

Experts reminded to use paper physical stock mortgage to reduce risk

He is a financial consultant for corporate finance, holds a No. 6 license of the China Securities Regulatory Commission, and also serves as an independent non-executive director of a listed company. The financial columnist "Diao Lao" said in an interview with "Hong Kong 01" that he had encountered similar financing companies, but He felt that the low interest rates and high loan ratios in the case were too favorable conditions. "Generally, the loan ratio of large blue chips is at most 50 to 60%, and the stocks of these private enterprises can usually only be borrowed from 10 to 20%. Knowing that their stocks are not large Blue chips, how can they borrow 60 to 70%?"

He analyzed that the loan agreement has pungent clauses and involves multiple jurisdictions, making judicial procedures very complicated.

He said helplessly: "They died of misfortune and greed," and reminded him that he could use paper stocks as collateral to prevent being transferred.

The financial columnist "Diao Lao" has published books.

He is a corporate finance financial consultant, holds a No. 6 license of the China Securities Regulatory Commission, and also serves as an independent non-executive director of a listed company.

Mortgage stock survey・1｜Mainland real estate businessmen’s financial difficulties and financing personally describe the way to come to Hong Kong to file a claim

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