Chapter 231 [Wang Qingxiong Is Completely Finished This Time (510)]
When Fang Hong came to Qunxing Capital, there was another rumor about Hengtong Pharmaceutical.
That is: if Hengtong Pharmaceutical cannot complete its IPO this year, it will have to seek a merger and acquisition as a second choice. Hengtong's exit by a third party becomes unpredictable. In order to ensure a smooth exit, Zhongtai Capital has set up a bottom-line clause: in case of failure to go public, the company must repurchase the equity in Zhongtai Capital's hands at a five-fold return on investment to ensure a smooth exit for the investor.
Once this rumor came out, it caused a thousand waves.
Since the end of 2007, Hengtong Pharmaceutical Group has been rushing to the A-share market and has been working hard for it. Because of the tight spell of a series of agreement clauses, Wang Qingxiong had to speed up the IPO process of Hengtong Pharmaceutical Group.
In early 2008, Hengtong Pharmaceutical Group formally submitted an application for listing on the A-share main board, but considering the number of companies waiting in line for listing on the A-share main board and the review process, it was already very tight to go public before 2009.
Unexpectedly, a financial tsunami swept the world last year. After Hengtong Pharmaceutical submitted its listing application, its application materials were actually in a state of "being put into cold palace".
After a year of tossing, there was no way to list on the A-share market.
After being rejected by the A-share market, Zhongtai Capital signed a gambling agreement with Wang Qingxiong, and Zhongtai required Wang Qingxiong to repurchase the equity at a high price in accordance with the agreement.
For Wang Qingxiong, he felt that he had also lost a lot. Under such circumstances, both parties were dissatisfied. The contradiction had existed half a year ago and continued to accumulate.
However, Wang Qingxiong still held back and negotiated with Zhongtai Capital, hoping to extend the time limit for another half a year.
After successfully obtaining an additional half-year deadline, Wang Qingxiong retreated to the next best option and began to switch to H shares. If he could not go public on the A-share market, he would seek to go south to Hong Kong for listing.
However, it was raining cats and dogs.
After half a year of tossing this year, the switch to H shares can basically be declared a failure.
Zhongtai Capital now will definitely not give Wang Qingxiong any grace time. The reason why it gave him half a year before was because it could not find a third party to take over.
But now it is different. Qunxing Capital jumped out and shouted that it was willing to take over and had the strength to take over. Zhongtai Capital of course chose to withdraw with interest without hesitation.
As for what will happen to Hengtong Pharmaceutical and Wang Qingxiong, Zhongtai Capital will not care about these at all.
Hua Yu got up and took a document from his desk and handed it to Fang Hong, saying: "This time I met with Liu Qizheng, the head of Zhongtai Capital, and obtained more specific details of the terms of the series of agreements from him. The failure of Hengtong Pharmaceutical to go public will directly lead to the series of terms of its investment agreement being triggered by a domino-like chain of liquidation priority terms, share repurchase terms, and preemptive sale terms signed with Zhongtai Capital."
As private equity financing, entrepreneurs and investors naturally have to sign a series of investment agreement terms lists, ranging from a dozen to dozens. In the game between entrepreneurs and investors, if investors have the dominant power, investors will form all-round constraints on entrepreneurial development and protect their own investment interests.
To put it bluntly, investors' money is not so easy to get if you want to. The cost of getting it is also very high, and the potential risks are not small.
If the investor really dug a trap and set a trap without noticing, how to control the entrepreneur in the future depends on the investor's mood.
Hua Yu said with certainty: "Wang Qingxiong is completely finished this time."
Fang Hong glanced through the liquidation priority clauses, share repurchase clauses and preemptive sale clauses signed by Hengtong Pharmaceutical Group and Zhongtai Capital in the material report.
After a while, Fang Hong couldn't help but look at it with admiration and said: "Zhongtai Capital is also playing well, especially these three clauses are linked together. Once triggered, they are triggered in a chain. Wang Qingxiong is really finished, and the fish on the chopping board is ironclad."
[Liquidation priority clause]
If Hengtong Pharmaceutical triggers a liquidation event, the Series A preferred shareholders, that is, the investor (Zhongtai Capital), have priority over the common shareholders, that is, the entrepreneurial shareholders (Wang Qingxiong) to receive a return of 5 times the initial purchase price per share.
The liquidation here is not the bankruptcy liquidation that is usually understood as being unable to continue operating due to insolvency. Instead, if the company merges, is acquired, sells controlling stakes, and sells major assets, resulting in the current shareholders of the company holding less than 50% of the equity of the surviving company, it will also be regarded as a liquidation event.
This agreement clause is down-to-earth. For example, if Hengtong wants to sell its equity, Zhongtai Capital will sell its equity first, and Wang Qingxiong will be in line at the back.
[Share repurchase clause]
If the majority of Class A preferred shareholders (Zhongtai Capital) agree, Hengtong Pharmaceutical should repurchase the outstanding Class A preferred shares in three years starting from the fifth year, and the repurchase price is equal to the original issue price plus the dividends that have been announced but not paid.
Of course, the triggering method of share repurchase can also be not a vote by preferred shareholders (Zhongtai Capital), but a specific time event specified in the clause, such as if the company fails to achieve an IPO within five years, the share repurchase clause will be triggered.
Now not only has the five-year period passed, but it has also been extended for half a year. Hengtong Pharmaceutical has undoubtedly triggered this clause due to a time event.
[Right of first sale clause]
Before Hengtong Pharmaceutical meets the IPO requirements, if the majority of Class A preferred shareholders (Zhongtai Capital) agree to sell or liquidate the company, the remaining Class A preferred shareholders and common shareholders should agree to the transaction and sell their shares at the same price and conditions.
All three clauses are now triggered, and Wang Qingxiong is already a fish on the chopping board.
The liquidation priority clause means that Zhongtai Capital can sell first, which is the first link; the share repurchase clause is to ensure that if Hengtong Pharmaceutical fails to go public, Zhongtai Capital can also exit with principal and interest, which is the second link; the lead sale clause means that Zhongtai Capital can sell its shares in Hengtong Pharmaceutical to whomever it wants, and Wang Qingxiong must agree to the transaction.
Zhongtai Capital now wants to sell to Qunxing Capital, and Wang Qingxiong has no choice, and the most important thing is the word "lead sale", that is, whoever Zhongtai Capital wants to sell to, Wang Qingxiong has to follow Zhongtai Capital to sell his shares at the same price and conditions, because the difference requires Wang Qingxiong to sell his own shares to compensate Zhongtai Capital, which is the last link.
Under the interlocking of this series of clauses, Wang Qingxiong has no control over it. From the moment of the failure of the listing, he has been unable to decide the future of Hengtong Pharmaceutical, which is completely controlled by Zhongtai Capital.
Fang Hong put the materials aside and said immediately: "Pack a debt as soon as possible and put it in the income statement of the shell company Ruihe, and also get some of your Huayang Group's non-performing asset packages in."
Hua Yu nodded and asked bluntly: "How much?"
Fang Hong pondered for a moment and said concisely: "Pack a 20 billion scale in."
Hua Yu nodded again: "I understand."
Packaging 20 billion debts or non-performing assets into Ruihe is naturally the third step of the strategy to annex Hengtong Pharmaceutical Group. The third step strategy formulated by Fang Hong is to completely clear Wang Qingxiong out, which is also the most ruthless step in the whole game.
After completing the second step of the "empty cage and replace bird" strategy, all the valuable things of Hengtong Pharmaceutical were packed and moved to the name of the shell company Ruihe. At this time, Qunxing Capital held 88% of the shares of Ruihe Company, and Wang Qingxiong still held 9% of the shares, and the remaining 3% were other small shareholders.
Wang Qingxiong was a small shareholder compared to Qunxing Capital at this time, but he still held 9% of the shares and was still the second largest shareholder of the company, and still had a lot of say.
After annexing Hengtong Pharmaceutical, Fang Hong wanted to carry out a large-scale reorganization of Ruihe. At this time, the biggest obstacle would inevitably be the second largest shareholder Wang Qingxiong. At this time, the first thing Fang Hong wanted to do in his mind was not to reorganize, but to kick Wang Qingxiong out completely, otherwise he would always jump out and sing the opposite tune, even if he could not have a practical impact on your plan, he could still disgust you from time to time.
Fang Hong also firmly believed that Wang Qingxiong would definitely do this. After all, from his point of view, how could he be willing to see the company he founded and created being annexed by Qunxing? How could he not feel resentful?
For example, Wang Qingxiong relied on his status as the second largest shareholder to request an audit, instigated several small shareholders to request a shareholders' meeting, proposed to dissolve the company, etc. If he did this, you would have to play along with him and go through the process with him.
Although it will definitely not be passed in the end, it is disgusting.
So he must be completely eliminated. The game in the capital market is not so black and white.
As a rational person, Fang Hong is destined to do this matter thoroughly, to get it all, and not leave any potential risks for himself.
Fang Hong will not have any psychological burden if he does it so thoroughly. This is the reality of the capital market. Besides, Wang Qingxiong himself is not a good guy, and he does not deserve sympathy for ending up like this, so there is no psychological burden.
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