After digesting the three-day Dragon Boat Festival holiday, the market now has a certain degree of acceptance.
Henglong During the entire holiday, Yiyi did not clarify anything, until the afternoon of the last day.
May 30, Tuesday, the last day of the Dragon Boat Festival holiday.
At 6:30 pm, Henglong Group issued two important announcements in one breath.
The first one: <Voluntary Clarification Announcement on the Source of Funds of the Actual Controller>
The announcement content is concise and restrained:
"The Company Board of Directors has noticed some recent market attention and media reports on the source of funds of its executive director and Acting Chairman Mr. Zhao Chen.
In line with the attitude of being responsible to investors, and authorized by Mr. Zhao Chen, the company hereby clarifies as follows:
1. The funds used by Mr. Zhao Chen to participate in Rights Issue this time all come from its personal legal investment income, including but not limited to investment income from the securities market and income from other compliance investment channels.
2. Mr. Zhao Chen has performed relevant tax declaration and foreign exchange management procedures in accordance with the law, and all fund flows are in compliance with the relevant laws and regulations of the China mainland and the Hong Kong Special Administrative Region.
3. Mr. Zhao Chen has taken the initiative to submit detailed documentation on the source of funds to the Hong Kong Joint Exchange and Securities and Futures Commission. Regulatory agencies and investors are welcome to inquire and supervise according to laws and regulations.
4. Our company Board of Directors confirms that the capital injection of Mr. Zhao Chen is conducive to the optimization of the company's capital structure and is in the interests of the company and all shareholders.
This is hereby announced."
Second copy: <Rights Issue final announcement of share allocation and payment results>
This announcement is more detailed and officially confirms the completion of Rights Issue and the equity situation after Rights Issue:
"Our company Board of Directors is pleased to announce that as of the afternoon of May 26, 2017, the acceptance and additional applications for Rights Issue have been closed.
According to the final verification data from the underwriters and the share registry, the total subscription rate of Rights Issue this time was 100%, creating the best subscription result in the history of Hong Kong Stocks.
The specific allocation is as follows:
Mr. Zhao Chen (Executive Director and Acting Chairman):
100,000,000 (one hundred million) shares were allocated, and Rights Issue later held 200,000,000 (Two Hundred Million) shares.
After Rights Issue, Mr. Zhao Chen holds 35.71% of the total share capital, ranking first Major Shareholder.
Mr. Zhao Jianguo (formerly Chairman):
10,000,000 (ten million) shares were allocated, and Rights Issue later held 170,000,000 (one hundred and seventy million) shares.
After Rights Issue, Mr. Zhao Jianguo holds 30.35% of the total share capital and is the second Major Shareholder.
Ms. Su Wantang:
8,000,000 (eight million) shares were allocated, and Rights Issue later held 28,000,000 (twenty-eight million) shares.
After Rights Issue, Ms. Su Wantang holds 5% of the total share capital. She is the third Major Shareholder.
Ms. Shen Zhiyi (new shareholder):
28,000,000 (twenty-eight million) shares were allocated, and Rights Issue later held 28,000,000 (twenty-eight million) shares.
After Rights Issue, Ms. Shen Zhiyi holds 5% of the total share capital. Major Shareholder is tied for third with Ms. Su Wantang.
Certain independent third-party investors:
A total of 14,000,000 shares were allocated.
Trading of Rights Issue shares is expected to begin on June 2, 2017 (Friday).
After the completion of Rights Issue, the company's issued share capital will increase from 400,000,000 shares to 560,000,000 shares."
The two announcements came one after another, sending a clear signal:
The company's operations are standardized and transparent, the actual controller's funds are legal and compliant, and Rights Issue was successfully completed.
Once the announcement was released, it triggered a more complicated reaction in the market.
In forums and chat groups where professional investors gather, the announcement was discussed enthusiastically, but the views were neutral to pessimistic.
"The announcement gave an explanation, but it was too general."
"What is 'other compliant investment channels'? Bitcoin? Private equity? Or something else?"
"It deserves recognition for taking the initiative to submit documents to the supervisory authorities. At least the attitude is cooperative."
"But will the supervision actually investigate? What will be the results of the investigation? These are all unknowns."
"The 100% subscription rate is amazing, which shows that the market still recognizes Henglong and Fundamentals."
"It may also be because the Westerners took most of it and left little for the market."
"The most interesting thing is that Zhao Jianguo only subscribed for 10 million shares."
"He originally had 160 million shares, and he was supposed to subscribe for 64 million shares based on 10 for 4. If he only subscribes for 10 million shares, the shareholding ratio will be diluted from 40% to 30.35%... This father-son relationship really exists in name only."
At Lin Wanqing's house, Liu Mingyu greeted her before making an announcement.
At this moment, she was staring at the announcement on the computer screen, her face gloomy.
"Take the initiative to submit documents to the regulator..." she murmured to herself, "Is there really no problem with his funds?"
Wang Bin stood aside and analyzed carefully:
"Mr. Lin, this shows that Zhao Chen is very confident in its source of funds. Otherwise, it would not dare to actively invite regulatory review."
"Or maybe he has already prepared a full set of compliance documents."
Lin Wanqing sneered,
"... If it is the main source of funds as he said, then he needs to provide complete transaction records, foreign exchange entry and exit records, and tax payment certificates.
It takes time to complete a complete set of these things."
She suddenly thought of something, "Wang Bin, when did you say Zhao Chen started preparing these documents?"
Wang Bin was stunned:
"It should be... recently, right? Funding doubts only appeared on a large scale on the night of the 26th."
"That's wrong." Lin Wanqing shook his head,
"If you recall his wording - 'I have voluntarily submitted it to the regulatory authorities'.
From the fermentation of media reports, to the preparation of documents by Zhao Chen, to the review by lawyers, and the company announcement process... two days are simply not enough."