On June 17th, according to Blue Whale News (reporter Wang Jianwen), less than three months after the new controlling shareholder took over, the cloud of the boardroom battle has begun to rise, and the conflict between the new and old controlling shareholders has been brought to the surface.
On the evening of June 14th, Gengstar Energy Group issued a notice stating that the new controlling shareholder, Zhejiang Haixin, requested to reorganize the board of directors, removing five non-independent directors including the former controlling shareholder Liang Yanfeng, three independent directors, and one supervisor. This means that although Zhejiang Haixin has taken control of Gengstar Energy Group, it has not yet gained control of the board of directors.
Zhejiang Haixin's request was immediately voted down by the company's current board of directors. Afterward, the Shanghai Stock Exchange quickly sent a regulatory work letter to the company, asking the company whether the reasons for rejecting the shareholder proposal were compliant.
Since its listing in 1996, Gengstar Energy Group has changed ownership four times, changed its name twice, and attracted attention from the market due to frequent rumors of being used as a shell company. During these ownership changes, the company's business has also undergone many transformations, ranging from the production of refrigerators to real estate investment, and even to trading in bulk commodities such as coal. Now, Zhejiang Haixin, the new controlling shareholder, who has already taken control of the company, has another entity, Hongji Co., Ltd., which was once listed on the National Equities Exchange and Quotations, under his name. It is still unclear whether it will be injected into the listed company in the future.
The old and new controlling shareholders are fighting in the boardroom.
Zhejiang Haixin, who has become the controlling shareholder, is now eager to gain control of the board of directors.
According to the announcement by Gengstar Energy Group, the company will hold the second extraordinary general meeting of shareholders for the year 2024 on June 24th. On June 13th, the company's board of directors received a proposal from controlling shareholder Zhejiang Haixin to be discussed at the shareholder meeting.
In the proposal, Zhejiang Haixin stated that Gengstar Energy Group has had multiple violations since 2022 and is currently under investigation by the China Securities Regulatory Commission for suspected illegal disclosure of information. In addition, the company has suffered huge losses in the first quarter of 2023 and 2024 and faces huge financial risks due to a large amount of overdue accounts receivable. It has received a qualified auditor's opinion for two consecutive years.
Zhejiang Haixin also stated that since the first quarter of 2023, the company has failed to make up for the losses that exceed one-third of its paid-in capital, but the company has not convened a shareholders' meeting in a timely manner to address this issue, which may violate the provisions of the Company Law and the company's Articles of Association.
According to the Company Law and Gengstar Energy Group's Articles of Association, when the accumulated losses of a company have exceeded one-third of the company's total paid-in capital, the company should convene an extraordinary general meeting of shareholders within two months.
Therefore, Zhejiang Haixin has requested the reorganization of Gengstar Energy Group's board of directors, the removal of five non-independent directors including Chairman Liang Yanfeng, Ni Jianda, Tang Yonglu, Xu Hongxing, Du Jiguo, three independent directors including Feng Songlin, Zhang Licui, Zhang Xiuxiu, and a supervisor, and their replacement with new members.
In response to this proposal, Gengstar Energy Group held a board meeting to discuss it. The result showed that the proposal was not approved with one vote in favor and eight against, and it was not submitted to the extraordinary general meeting of shareholders for consideration. From the voting results, it can be seen that the eight directors previously targeted by Zhejiang Haixin's proposal voted against it, and Zhao Chenchen, who voted in favor, became a director just this May, with backing from Zhejiang Haixin.
After rejecting the proposal from the controlling shareholder, the Shanghai Stock Exchange also quickly issued a regulatory work letter to Gengstar Energy Group, asking the company to provide detailed explanations on the reasons for rejecting the proposal and whether they are compliant. In addition, the Shanghai Stock Exchange has asked Zhejiang Haixin to exercise shareholder rights in compliance with the law, ensure the interests of the listed company and other shareholders, and ask the board of directors to carefully and properly handle matters raised by shareholders.
From a time perspective, Zhejiang Haixin has not been the controlling shareholder of Gengstar Energy Group for a long time. On March 20 of this year, Zhejiang Haixin acquired 24.10% of the company's shares through judicial auction and became the company's new controlling shareholder. However, in less than three months, there have been multiple "frictions" between Zhejiang Haixin and the board of directors of Gengstar Energy Group controlled by former actual controller Liang Yanfeng.
Just two days after Zhejiang Haixin became the controlling shareholder of Gengstar Energy Group, on March 22, Gengstar Energy Group held its first interim shareholders meeting in 2023. At the meeting, the board of directors put forward a total of four proposals, including the re-election of the company's directors, the expected daily related transactions in 2024, application for comprehensive credit from banks, and providing guarantee quotas for wholly-owned subsidiaries. However, except for the proposal of applying for comprehensive credit from banks, the remaining three proposals were rejected.
From the voting results, except for shareholders holding less than 5% of the shares, the above three proposals all received 42.6615 million votes in favor and 55.5 million votes against. As at the end of the first quarter of 2024, the company had only three shareholders with more than 5% of the shares, including Zhejiang Haixin, Fujian Ruishan, who also became the company's second largest shareholder through judicial auction, and Jieyu Asset Management, which had held the shares for many years. Among them, Zhejiang Haixin holds 24.10% of the shares, a total of 55.5 million shares, while Fujian Ruishan and Jieyu Asset Management hold 10.60% and 7.62% of the shares, respectively, with a total of 42.6615 million shares. This means that Zhejiang Haixin voted against the above three proposals.
On May 21, 2023, Gengstar Energy Group held its annual shareholders meeting again. At the meeting, the proposals to amend the "Company Articles of Association", "Rules of Procedure for the Board of Directors" and provide guarantee quotas for wholly-owned subsidiaries were all rejected. Among them, the company disclosed the specific voting results for the proposal to provide guarantee quotas for wholly-owned subsidiaries, with 55.5 million votes against from shareholders holding more than 5% of the shares, which means that Zhejiang Haixin once again rejected the proposal put forward by the board of directors.
At this shareholders meeting, Zhejiang Haixin also put forward a proposal to appoint Zhao Chenchen as the new director of Gengstar Energy Group, which received 101 million votes in favor, and the top three shareholders of the company all voted in favor of the proposal.
After receiving the regulatory letter from the Shanghai Stock Exchange, the Blue Whale News reporter called Gengstar Energy Group to verify whether the board of directors had communicated with Zhejiang Haixin's shareholders and why Zhejiang Haixin had repeatedly rejected the company's proposals, but as of the time of publication, no response had been received.
The control of power has changed hands many times, and there has been a precedent for the "dual-head" board of directors.
In March of this year, Zhejiang Haixin replaced Zhonggeng Group as the new controlling shareholder of Gengstar Energy Group through legal auction, and this is already the fourth change of ownership since Gengstar Energy Group went public.
As early as 1996, the predecessor of Gengstar Energy Group, Bingxiong Stock Co., Ltd., was listed on the Main Board of the Shanghai Stock Exchange. At that time, the company was a state-owned holding company, mainly engaged in the production of refrigerated refrigerators. However, due to poor management, the company was delisted. In 2003, Chongqing Yinxing entrusted Chongqing Guoxin to acquire 28.00% of the company's shares, becoming the company's largest shareholder, and Chongqing Yinxing also became the company's new controlling shareholder. In 2007, the company changed its name to Dongfang Yinxing.
After the restructuring of assets, Dongfang Yinxing began to invest in the real estate industry, but since then, the company's real estate business has been declining. From 2009 to 2011, the company's revenue was only 0 billion yuan, 0.1 billion yuan, and 0.01 billion yuan.
In 2013, Han Hongwei, a wealthy man from Henan, also set his sights on Dongfang Yinxing. Since then, Yushang Co., Ltd. has continuously increased its stake in Dongfang Yinxing and began to seek control of the company. By 2014, Yushang Co., Ltd. and Chongqing Yinxing were tied as the company's largest shareholders, with both holding 29.99% of the shares.
In August 2015, Chongqing Yinxing transferred nearly 30% of its shares in Dongfang Yinxing to Jinzhong Dongxin, which became the new controlling shareholder of the company. After Jinzhong Dongxin took over, the "internal struggle" with Yushang Co., Ltd. for control of the company became more and more intense, and the company once had a situation of a "dual-head" board of directors, with the two major shareholders separately holding shareholders meetings and electing different board of directors.
In March 2017, Jinzhong Dongxin, which had been a shareholder of Dongfang Yinxing for just over a year, once again transferred its shares, selling 29.98% of the company's shares to Zhonggeng Group for 2.15 billion yuan, becoming the company's fourth controlling shareholder, and Zhonggeng Group General Manager Liang Yanfeng became the company's new actual controller. Since then, Zhonggeng Group has increased its holdings of the company's shares many times, and its shareholding ratio has increased to 35.57%.
According to the official website of cengstar energy group, the company's main businesses include real estate, industrial parks, supply chain, and financial investments, among others. It was once named among the top 100 real estate enterprises. As early as 2006, cengstar energy group sought to go public, but it ultimately failed. Some believe that cengstar's acquisition of eastern silver star was also aimed at achieving a backdoor listing, but the company ultimately did not include its businesses under eastern silver star.
In 2023, the stock abbreviation of the company was changed to gengstar energy group. In the same year from July to September, there were market rumors that Wuhan minsheng, a radio frequency antenna company, would go public by backdoor listing through gengstar energy group. Influenced by this, gengstar energy group's stock price once soared, but the company did not respond to the rumors, and its stock price gradually fell thereafter.
Due to violations of stock pledge business, disputes involving factoring contracts, and other reasons, the shares of gengstar energy group held by cengstar group began to be judicially frozen in October 2021. Subsequently, the proportion of frozen shares gradually increased, and finally, all shares held by the company, accounting for 35.57% of the total, were frozen. In March 2024, the shares of the company held by cengstar group, accounting for 34.71%, were judicially auctioned off. Zhejiang haixin won 24.10% of the equity, and Fujian ruishan won 10.60% of the equity. Zhejiang haixin became the new controlling shareholder of the company, and the actual controller changed from Liang Yanfeng to Zhong Renhai.
Did Haixinben come for a shell in Zhejiang?
Since cengstar group took control of eastern silver star in 2017, the latter's main business has shifted from real estate to bulk commodity trading of coke and coal, leveraging cengstar's resource advantages in the coal chemical industry. In the same year of the transformation, the company's performance improved significantly, achieving a revenue of RMB 346 million, a year-on-year increase of 1051.58%, and a net income attributable to the parent of RMB 19 million, a year-on-year increase of 623.45%.
However, in 2021, affected by the dual-carbon policy and other factors, eastern silver star's revenue plummeted and net income attributable to the parent turned from profit to loss. Subsequently, the company began to explore transformation again and planned to enter the field of new energy electric vehicle public charging. In addition to new energy, gengstar energy group is also planning to enter the semiconductor industry. In the same year, the company spent RMB 30 million to acquire 2.91% equity of Wuhan minsheng, a MEMS company, indicating that it will work with Wuhan minsheng to achieve autonomous and controllable high-end filters.
However, it remains to be seen whether the above-mentioned business transformation can be successful. In 2023, the company's revenue was RMB 818 million, a year-on-year decrease of 55.72%, with a net loss attributable to the parent of RMB 51 million, turning from profit to loss again. Specifically, the operating revenue of the bulk commodity supply chain management business of the company declined by 55.93%, while the revenue of the charging service business increased from zero to RMB 3.797 million, still at a low level, with a gross margin of only -15.34%. In addition, as of the end of 2023, the company had not yet started semiconductor-related businesses.
Regarding the company's current performance and business development, gengstar energy group stated that in 2024, it will gradually shrink the scale of bulk commodity supply chain businesses such as coal, depending on the progress of new business transformation, and expand in the field of new energy electric vehicle public charging. At a recent earnings conference, the company also stated that its charging operation stations have opened and operated in Shanghai, Fuzhou, Hangzhou and other places.
With a new owner, gengstar energy group may welcome new expectations. According to tianyancha, Zhejiang haixin was established in February 2024, with Zhong Renhai and Zhao Chencheng holding 99.98% and 0.02% shares, respectively. In addition to controlling Zhejiang haixin, Zhong Renhai is also the chairman of another company, hongji shares, and controls 93.55% of the company's shares. Hongji shares used to be listed on the national equities exchange and quotations and was delisted in 2018. The company is a petrochemical enterprise mainly engaged in the production of polyolefin-related products.
As to whether the chairman's subsidiary, after obtaining control of gengstar energy group, will inject Hongji shares into the listed company, the blue whale news reporter also called Hongji shares for verification, but no reply was received as of the publication of this article.