Sun Hengchao, who was deeply involved in the whirlpool of debt, was taken compulsory measures for being involved in a criminal offense.
On November 19, the official website of Baota Group Finance Company (hereinafter referred to as Baota Finance Company) announced that Sun Hengchao, Chairman of the Board of Directors of Baota Petrochemical Group (hereinafter referred to as Baota Group), Sun Peihua, Chairman of Baota Finance Company, and others were arrested by the public security organs on suspicion of criminal offenses.Take coercive measures.Sun Peihua is the son of Sun Hengchao.
On the evening of November 16, Baota Group’s listed company Baota Industrial Co., Ltd. (hereinafter referred to as Baota Industry, 000595.SZ) revealed more details: At 3:00 p.m. that day, the group’s high-level meeting was held in the multi-functional hall on the 4th floor of Ningxia Baota Petrochemical Building.The leadership meeting and the public security organs made the above notification.Hao Liping, director and deputy general manager of Baota Industrial, resigned recently and will no longer hold any position in the company after resignation.
It is not yet possible to determine when Sun Hengchao was taken compulsory measures.According to the company's official website, from November 2 to 4, Sun Hengchao gave an opening speech at the fourth management cadre training of Baota Group in 2018.However, Sun Hengchao was absent from the first China International Import Expo. On November 6, Pagoda Group and the oil trading company Trafigura Group signed a crude oil cooperation agreement at the Expo. Wang Jingbo, the executive president of the group, attended and signed the contract.
Sun Hengchao was born in March 1960 in Zhongwei City, Ningxia. He graduated from the Law Department of Northwest University of Political Science and Law. He taught at Lanzhou University in his early years. He went to sea in 1993. In 1997, he acquired the small refinery of Nanliang Farm, which was on the verge of bankruptcy, and founded NingxiaBaota Petrochemical (predecessor of Baota Group); invested in the establishment of Yinchuan University in 1999 and served as the president.He was also a member of the Eleventh National Committee of the Chinese People's Political Consultative Conference, during which he served as a special supervisor of the Ministry of Public Security.
Over the years, Baota Group, whose main business is petrochemicals, has continuously extended its tentacles to other fields. So far, it has seven major industrial groups including petrochemicals, financial holdings, commerce, technology engineering, education, investment holdings, and new energy, ranking in 2017.Ningxia's top private enterprises.As of the end of September 2018, the group's total assets were 66.85 billion yuan.
Indebted
Baota insiders revealed to the Caixin reporter that Sun Hengchao is likely to have a debt problem.The group's financial report shows that as of the end of September 2018, the group's total liabilities totaled 34.056 billion yuan, of which current liabilities were 25.935 billion yuan, accounting for 76.15%. Current liabilities refer to debts that need to be repaid within one year.According to the Caixin reporter, Baota Group can raise off-site financing through its own financial company, and its actual debt may be higher than the figure disclosed in the financial report.
The external loan guarantee provided in the 2017 annual report shows that the due date of the loans of Baota Group in financial institutions is concentrated in 2018, and the large amount of funds involved includes Bank of Jinzhou, China Huarong, Tibet Trust, Bairui Trust, Bohai International Trust, China Construction Bank, Ping An Bank, Baoshang Bank, etc. Among them, Jinzhou Bank is the largest, with a guaranteed loan balance of 2.663 billion yuan.
The Pagoda Group has long been known as Lao Lai.According to the Information Inquiry Platform of the Supreme People’s Court, since July 2018, due to the maturity of two debts, Baota Group and Sun Hengchao have been listed as dishonest executors twice, involving an amount of about 65 million yuan.The specific situation is that the person subject to enforcement refuses to perform the obligations specified in relevant agreements and effective legal documents without justified reasons and the ability to perform.
A criminal lawyer pointed out that after the effective judgment document confirmed the payment obligation, the obligor did not voluntarily perform, and after the people's court took enforcement measures, the obligor still refused to execute, or committed a criminal offense - refusing to perform the judgmentIf the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not more than three years, short-term detention or a fine; if the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined.
The Supreme People's Court's information query platform for persons subject to enforcement also shows that as of November 19, 2018, Baota Group and its subsidiaries Baota Industry, Baota Investment and other companies have 15 outstanding arrears that are still in execution, involving a total of 1.354 billionYuan, the case filing time was concentrated in 2018, and the most recent case was filed on November 16.
In addition, since the end of March 2016, Sun Hengchao and Baota Group have been listed as restricted consumers for many times due to failure to fulfill the payment obligations determined by effective legal documents, involving disputes over loan contracts, financial lease contracts and other types of disputes.The executors include Huarong Financial Leasing, Ningbo Meihua, Yunnan International Trust, Huaxin International Trust and other companies.
The two equity transfers at the end of 2017 exposed the tension in the capital chain of Baota Group.At that time, Baota Group announced that it would transfer 79% of the equity of Xinjiang Kuishan Baota Petrochemical to Wenzhou Heli Commercial Management Partnership (Limited Partnership) and Wenzhou Yatian Environmental Protection Equipment Co., Ltd., with a total transfer consideration of 3.376 billion yuan; Zhuhai Baota Petrochemical 89.15%Equity, Zhuhai Zhongnanhui Chemical and other three companies transferred 100% equity to Beijing Yulong International Trade Co., Ltd., with a total transfer consideration of 2.275 billion yuan.Baota Petrochemical, whose main business is petroleum refining, explained that this move will promote the transformation of the company's industrial structure.
Baota Group emphasized that the equity transfer will not have a significant impact on the two medium-term bonds of 14 Ningbaota MTN001 and 14 Ningbaota MTN002 that are in existence.The scale of these two bonds is 800 million yuan and 1 billion yuan, which will mature in January and September 2019 respectively.In April 2018, Pagoda Group held a meeting of holders on equity transfer matters, and almost no holders agreed to the transfer plan.
Baota Group is also financing through Baota Finance Company.However, since May 2018, Baota Finance Company began to overdue the payment of bills. The company explained on July 10 that the overdue was due to a mistake in work, and the issue of risk control and payment was not strictly coordinated; on July 16, Lianhe Credit EvaluationCo., Ltd. (hereinafter referred to as Lianhe Credit) issued a concern announcement, saying that the overdue reflected that Baota Group had deficiencies in fund collection and risk control management of its subsidiaries.However, on July 26, Lianhe Credit still rated the long-term credit rating of Baota Group and its related claims as AA, and the rating outlook was stable.AA grade means that the ability to repay the debt is very strong, it is not greatly affected by the adverse economic environment, and the risk of default is very low.
As a financial instrument of Baota Group, Baota Finance Company provides financial services such as fund management, credit and settlement.According to the official website, Baota Finance Co., Ltd. was established in April 2016. It is the first non-bank financial institution in Ningxia approved by the China Banking Regulatory Commission and approved by the Ningxia Banking Regulatory Bureau.
Unexpectedly, the magnetic field effect of the financial company is so strong. In just one month since its establishment, our credit line with banks in the same industry has increased rapidly. In the past, we asked our grandpa to tell our grandma to mortgage some assets here and there. The cost is high and the speed is slow, and financing is limited.Sun Hengchao told the media at that time that he also said at the 2017 work conference that in the future, financial companies will open up various financing channels and enhance their external financing capabilities.
Business Mess
So far, Baota Group spans petrochemicals, financial holdings, commerce, technology engineering, education, investment holdings, new energy and other fields.The pavement of the stall is too large, and the battle line is too long.A senior person in the industry commented.
According to the official website, Baota Group currently has a primary processing capacity of 12.5 million tons of crude oil, of which the annual primary processing capacity of the Ningxia base is 7.5 million tons, and the primary processing capacity of the Xinjiang base is 5 million tons.It has crude oil import quotas and qualifications approved by the National Development and Reform Commission and the Ministry of Commerce, crude oil import use qualifications, international crude oil trade qualifications, refined oil wholesale qualifications, and fuel oil import qualifications. It is the first private refining and chemical enterprise in China with all five certificates.In stark contrast to the tens of millions of tons of production capacity given by the official website, since 2016, the actual average annual crude oil consumption of Baota Group has been less than one million tons.
The official website also introduced that Baota Group has obtained the qualification to use 6.16 million tons of imported crude oil per year.In fact, the National Development and Reform Commission issued a letter in September 2017,This indicator was lowered to 2.16 million tons per year, and Baota Group was required to fulfill its commitment.When conducting indicator verification and evaluation in 2015, Baota Group promised to build 200 million cubic meters of LNG peak-shaving gas storage facilities, with an oil consumption of 4 million tons per year.
Baota Group did say in 2015 that it would enter the LNG field.At that time, Baota Group and Chaozhou Huafeng Group planned to cooperate in the construction of an LNG storage and distribution station project in Chaozhou Fujian-Guangdong Economic Cooperation Zone.Later, Changchun Zhongtian Energy Co., Ltd. took over and participated in the investment and construction (hereinafter referred to as Zhongtian Energy, 600856.SH). According to its disclosure, the LNG resources of the project were purchased by Baota Group.Like the Pagoda Group, Zhongtian Energy also has continued debt litigation, and even planned to sell itself to save itself at the end of September.
Currently, Baota Group is still promoting the Penglai LNG receiving station project.The project started in 2016 with an estimated total investment of 4.9 billion yuan and a design scale of 2.8 million tons per year, equivalent to 3.75 billion cubic meters per year. The onshore plan of the project will be discussed until August 2018.Baota Group once planned to build a 6.5 million tons olefins project in Zhuhai. The project started in 2006, and the first phase of 1.5 million tons was put into production in 2011. According to Caixin reporter, the project has changed hands due to problems such as poor management and heavy debts.To the food company Zhonggu Qilong.
In addition to Zhongtian Energy, Pagoda Group also has intersections with many companies that appear to be problematic to the outside world. The above-mentioned industry veterans interpreted this as holding together for warmth.
In December 2014, Baota Group and Jiangsu Huijin Holdings Group Co., Ltd. (hereinafter referred to as Jiangsu Huijin) signed a strategic cooperation agreement, agreeing that Jiangsu Huijin would increase the capital of Baota Group, and Baota Group would invest 3 billion yuan in Jiangsu Zhengyang Investment Holding Group Co., Ltd.(hereinafter referred to as Jiangsu Zhengyang) capital increase.In that month, Jiangsu Huijin became a shareholder of Baota Petrochemical, and then withdrew in June 2016; Baota Group took shares in Jiangsu twice from June 3 to July 27, 2015, and from March 17 to March 25, 2016.Zhengyang.Zhu Mingliang, the real controller of Jiangsu Huijin and Jiangsu Zhengyang, is one of the major shareholders of Hengfeng Bank and has been deeply involved in the series of equity operations of Hengfeng Bank.
In March 2015, Pagoda Group had planned to take a stake in Hanergy Thin Film Power Group Co., Ltd. (0566.HK, hereinafter referred to as Hanergy Thin Film), and signed a sales and service agreement with the latter, involving an amount of about 10 billion yuan. The transaction was later cancelled..Hanergy Thin Film was widely questioned by the market due to related transactions and high accounts receivable. It was forced to suspend trading by the Hong Kong Securities Regulatory Commission in 2015 and has not resumed trading so far.
In June 2015, Baota Group and Guangdong Zhenrong Energy Co., Ltd. (hereinafter referred to as Guangdong Zhenrong) signed a strategic cooperation agreement. The two parties plan to jointly develop overseas energy markets in crude oil imports, petrochemicals, LNG and chemical trade, wholesale and retailActively cooperate in many fields.At that time, Guangdong Zhenrong already had financial problems. So far, it has tens of billions of yuan in bad debts, involving hundreds of billions of yuan in false trade volume, business suspension, and no real realizable assets.(For details, see Caixin cover report on Guangdong Zhenrong black hole) Just in January 2018, according to Reuters, Guangdong Zhenrong also requested Pagoda Group to jointly invest in a US$3.4 billion oil refining project located overseas.■
