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Product: research Institute of Sina Finance listed Company

Author: IPO refinancing Group / Zheng Quan

On May 22, Huakai Yibai issued a restructuring draft, which intends to use 700 million yuan in cash to acquire 100% stake in Tongtuo Technology (also known as the subject matter) held by Huading shares (rights protection). The 700 million yuan cash transaction "hollowed out" the cash on the books of listed companies.

The draft shows that Tongtuo Technology suffered huge losses for two consecutive years in 2022 and 2023, but Huakai Yibai still spent 700 million yuan in cash acquisition and did not set a performance commitment. It is worth mentioning that the restructuring valuation uses the results of the asset-based approach, which can circumvent the mandatory regulatory requirements of performance commitments.

What is more interesting is that Tongtuo Technology failed to fulfill its performance commitment when it was acquired by Huading shares last time, and the relevant responsible persons were disciplined by the Shanghai Stock Exchange for failing to fulfill their compensation obligations as agreed for a long time. Whether Huakai Yibai's acquisition of continuous loss-making Tongtuo Technology without performance commitment can protect the interests of listed companies and minority shareholdersRoyalpoker88?

The acquisition of the target of continuous losses did not set a performance commitment of 700 million yuan to "empty" the book cash.

According to public information, Huakai Yibai's original main business is a cultural and creative enterprise that provides comprehensive environmental art design services for large interior spaces such as exhibition halls and exhibition halls. After Huakai Yibai acquired a 90% stake in Yibai Network in 2021, the cross-border export e-commerce business became the company's main business.

Now, Huakai Yibai plans to buy 100% stake in Tongtuo Technology held by Huading shares with 700 million yuan in cash. The restructuring draft shows that Tongtuo Technology, the target of the acquisition, is a cross-border export e-commerce company with a pan-supply chain and a wide range of products.

Hua Kai Yibai said that the acquisition of Tongtuo Technology can give full play to the business synergy of the supply chain and channel end, enhance the sustainable operating ability of listed companies, expand the scale of business, increase market share, and produce scale advantages. improve comprehensive competitiveness and anti-risk ability.

However, Tongtuo Technology has lost money for two years in a row. In 2022 and 2023, Tongtuo Technology realized revenue of 3.447 billion yuan and 3.413 billion yuan respectively, and deducted non-return net profit of-341 million yuan and-107 million yuan respectively.

It is inconceivable that Huakai Yi's acquisition of Tinto Technology, which has made continuous losses, has not set up performance commitments and performance compensation arrangements. can this protect the interests of minority shareholders?.

It is worth noting that Huakai Yibai's 700 million yuan cash acquisition will be "hollowed out" of paper cash. By the end of the first quarter of 2024, Huakai Yibai had 599 million yuan in monetary funds and 95 million yuan in transactional financial assets, totaling 694 million yuan.

The restructuring draft shows that Huakai Yi's 700 million yuan payment will be paid to the counterparty Huading shares within 120 days after the shares are delivered, of which 490 million yuan (70% of the total price) will be paid within 5 working days after the listed company, the counterparty and the underlying assets go through the internal decision-making and approval procedures for the transaction.

700 million yuan to acquire the subject matter of continuous losses, and 700 million yuan will soon be paid to the counterparty to "hollow out" the book funds of the listed company. What kind of medicine does Huakai Yibai sell?

The subject matter was acquired last time and failed to fulfill the performance promise. The counterparty was punished for standing up for a long time.

Data show that the last time Tongtuo Technology was acquired by Huading shares, the counterparty failed to fulfill its performance promise.

In April 2018, Huading completed its acquisition of Tongtuo Technology, with a transaction consideration of 2.92 billion yuan. At that time, the original shareholders of Tongtuo Technology promised that the net profit of deducting non-parent in 2017, 2018 and 2019 would not be less than 200 million yuan, 280 million yuan and 392 million yuan respectively.

In 2017, Tongtuo Technology fulfilled its performance commitment. In 2018 and 2019, Tongtuo Technology achieved a non-return net profit of 221 million yuan and 287 million yuan respectively, with a completion ratio of 78.98% and 73.23% respectively.

Tongtuo Technology not only failed to fulfill its performance promise, but also "stood it up" by the performance compensation obligor. According to the agreement signed by the two parties at the time of the acquisition, if Tongtuo Technology fails to fulfill the agreed performance commitment, Tongwei Investment, Zou Chunyuan and Liao Xinhui will compensate within 10 working days after the annual company audit report is disclosed.

The auditor of Huading's annual report issued a reservation on the performance of 2019, and did not issue an audit report until April 28, 2021, confirming that Tongtuo had not fulfilled its performance commitment for that year in 2019.

According to the agreement, Tongwei Investment, Zou Chunyuan and Liao Xinhui should pay Huading shares 349 million yuan in promised compensation within 10 working days after the disclosure of the audit report (before May 13, 2021), equivalent to 37.3288 million shares of compensation. however, the above obligations were not fulfilled until August 2022.

Tongtuo Technology failed to fulfill its performance promise, and the violations of Tongwei Investment, Zou Chunyuan and Liao Xinhui for failing to fulfill their performance compensation commitments for a long time were disciplined by the Shanghai Stock Exchange on the grounds that the losses of listed companies could not be compensated for a long time, harming the legitimate rights and interests of the company and medium and small investors.

The Huakai Yi 10 billion yuan cash acquisition of continuous losses, the last acquisition of the unfulfilled performance commitment of Tinto Technology, unexpectedly did not set a performance commitment. When counterparties do not have the pressure of performance commitment, the rights and interests of listed companies and minority shareholders lose a barrier.

Skillfully choose evaluation methods to evade performance commitments?

The reason why Huakai Yibai has no performance commitment in this major asset restructuring is closely related to the conclusion of the selected evaluation method. According to Article 35 of the measures for the Administration of Major Asset restructuring of listed companies, in major asset restructuring or issuing shares to purchase assets, the following two conditions are met at the same time, the other party of the transaction needs to make a performance commitment: (1) to evaluate or value the assets to be purchased by means of income present value method, hypothetical development method and other methods based on the expectation of future income and serve as a reference for pricing. (2) where a listed company buys assets from the controlling shareholder, the actual controller or the related person controlled by it, or the listed company buys assets from a specific object other than the controlling shareholder, the actual controller or the related person under its control, resulting in a change of control.

Since Huakai Yibai chose the asset-based method evaluation result as the final evaluation result and did not adopt the present value of income method evaluation as the final result, the reorganization does not require performance commitments. That is to say, this reorganization may not have performance commitments, or performance commitments may be set.

Then why didn't Huakai Yibai set a performance commitment in this reorganization to better protect the interests of listed companies and the rights and interests of minority shareholders? Is it reasonable to use the asset-based approach assessment results as the final result?

Huakai Yibai said that the evaluation results obtained using various evaluation methods can reasonably reflect the market value of the evaluation objects. Considering that the income method evaluation is based on the premise that the operating forecasts provided by the management of the evaluated unit are consistent with the changes in the internal and external environment related to the future operations of the evaluated unit and can be effectively implemented, the cross-border e-commerce industry is easily affected by international trade relations and changes in various countries 'trade policies towards China, so the forecast data based on history and current conditions may differ significantly in the future due to external factors. This in turn has a significant impact on the results of the income method. The asset-based method objectively reflects the market value of the owner's equity from the perspective of asset construction. The valuation results of each asset and liability will be relatively less affected by differences in the future operating and expected conditions of the evaluated unit. Therefore, this assessment is based on the asset-based method. The assessment results are used as the final assessment conclusion.

According to Huakai Yibai's explanation, since the cross-border e-commerce industry is difficult to evaluate using the income method, why did the company say in the reorganization draft that acquisitions can improve its ability to continue operations? Moreover, Tongtuo Technology continues to lose money and its future is unpredictable. Why does Huakaiyi still spend huge sums of money on acquisitions? Since the evaluation results obtained using various evaluation methods can reasonably reflect the market value of the evaluation object, why does Huakai Yibai not use the income method to evaluate conclusions, and the evaluation results of the two evaluation methods are similar?

The reorganization draft shows that after evaluation using the asset-based method, Tongtuo Technology's market value of all shareholders 'equity on the evaluation benchmark date (December 31, 2023) is 76royalpoker88, 9.0234 million yuan; the assessed value of the market value of all shareholders 'equity on the benchmark date using the income method was 74royalpoker88, 4.79 million yuan, there is only a difference of 24.23 million yuan, and the income method evaluation value is smaller.

Since the evaluation results using the asset-based evaluation method and the income method are similar, both of which are more than 700 million yuan, and performance commitments should be set when using the income method evaluation, why did Huakai Yibai not choose the income method evaluation results? Even if the asset-based evaluation method is used to evaluate the results, although performance commitments may not be mandatory for this reorganization, performance commitments can also be negotiated to better protect the interests of listed companies and minority shareholders.