Case playback:
A Limited by Share Ltd is a large domestic home appliance retail chain enterprises, capital bottleneck, development scale and business income is far less than rivals, so determined to accelerate the pace of development through equity restructuring. In 2005 January, B international Financial Services Company and C investment fund management companies to buy A for 000000 20% stake in the company, and reached the following agreement: if A company in 2007 (in the case of irresistible force, can be delayed to 2008 or 2009) after non core business after the net profit more than 750000000 yuan, investors will transfer 46973800 shares of A company shares to the company A; when the profit of between 675000000 yuan and 750000000 yuan, not valuation adjustment; if the net profit of between 600000000 yuan and 675000000 yuan, the management to the investment side ceded 46970000 shares; when the profit of less than 600000000 yuan, the management to cede shares increased to 93950000 shares, accounted for A of listed companies the total equity (excluding the exercise of the over-allotment option) of about 4.1%. In 2005 October, A company successfully listed in Hongkong. Subsequently, A company has implemented a series of mergers and acquisitions, but due to excessive expansion of the enterprise internal consumption is too large, operating performance has been unable to reach agreement requirements. In 2006 July, under the investment side pressure, A company by the rival, expansion of this lost dream.
Intensive analysis:
Restructuring agreement (contract) belongs to nameless contract listing Corporation, in addition to a major reorganization of assets, debt restructuring, the state-owned shareholder agreement on the transfer of shares of the listing Corporation, the restructuring of state-owned enterprises, some of the requirements of the law, enterprises can according to "the relevant provisions of the contract law" set free terms. In recent years, with the gradual prosperity of the capital market, in order to overcome and relieve the financial investment and differences in the two problems of enterprise valuation, information asymmetry and so on, the agreement on gambling in China's enterprises in the process of restructuring began to appear and promotion. On the investment side, it can reduce the agency cost, prevent the moral hazard behavior of financing parties, to ensure the ultimate realization of investment income; on the financing side, it can help enterprises get funds needed for development, incentive financing efforts to improve future actual benefit, enhance the investee enterprise value. To achieve "win-win" agreement on gambling, but there are some risks:
A. legal risk
Convertible securities, lack of legal system of anti-monopoly review requirements and small and medium-sized shareholders potential litigation in China, reduced investment in the implementation of the agreement on gambling can be used when the investment tool, improve the implementation of the agreement on gambling transaction costs, also added a convertible preferred stock terms and the effectiveness of VAM uncertainty.
B. risk management
As for capital eager, financing side in the signing of the agreement on gambling is easy to determine the unrealistic goals. In order to honor their commitments, companies often implement the external irrational expansion, destruction of internal governance, amplifying its immature business model and error strategy. Once the failure of gambling, enterprises will face to cede shares even lost control of risk, the enterprise to the dilemma.
C. the risk of the terms
Some enterprises in China have a lot of money through the traditional financing way is very difficult, urgent demand for funds to finance enterprises signed to ignore the change of the economic environment gambling agreement, lack of integrity of the risk and return, and even in some conditions to make major concessions. That estimate the value of the enterprise, loss of control independence, suffered huge losses in the outstanding performance.
In this case, A Limited by Share Ltd hopes to accelerate the pace of expansion of enterprises through equity restructuring, but the agreement on gambling neglected the development stage of their industry, excessive expansion is not only no net profit increase, but because the integration and management cost, reduce the enterprise's profit ability. At the same time, because there is no set the termination clause and exclusive provision gambling on the agreement, the investor listed A company has exercised the option and lucrative, but A company after the listing is still bound by the agreement on gambling. When the decline in performance, investors still use market means to promote competitor bought A, resulting in the premium and the obtained double bumper harvest of gambling on the agreement.
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