Story between XAB and Greencool
Resource from: cbcc-yinx Likes:2998
Aug 10,2005
At the beginning of August, XAB canceled the equity transfer contract with Greencool. Later, the president of Greencool was arrested for embezzlement. Is there any link between.
In China, HRB, ZWZ, LYC and XAB are the top 4 bearing enterprises. XAB is the leading enterprise in auto bearing's manufacturing. On Jan 6 1997, XAB was publicly traded in Shenzhan Securities Exchange. At that period, XAB was such a big power and it had been selected as one of the three National Auto Bearing Manufacturing Bases. However, its prosperity not continued. Capital gained through share offering in 2000 still failed to bail them out of troubles caused by management's arbitrary operation. By the end of 2003, XAB had been on the edge of collapse.
During that period, XAB's future became a hot topic. When lots of people were forecasting what XAB will be like, XAB announced that they have signed a equity transfer contract with Greencool, a manufacturer of household appliance, in April 2004. According to the contract, XAB will sell 41,613,308 shares to Greencool at a price of RMB2.41 yuan per share, which means that Greencool will become the largest shareholder in XAB. After the signing of contract, representative from Greencool had beome XAB's board member even if the contract was not approved by relevant department.
"Just a week after I had heard about this event, I was informed that it is. This event was in charged of by officials from local government and relevant departments. I know little details." said Mr. Liao yonggao, the General Secretary of XAB's board of director.
The government admited that the decision was made so hurry and they also gave an excuse for this flash decision. XAB had tried to sign equity transfer contract with Wanxiang Group but the negotiation between lasted for almost a year with no agreement. During that year, local government and XAB had made every procedures or documents ready for the equity transfer, even if that was not necessary. When they negotiated with Greencool, those previously preparation expedited the signing of contract. Another excuse is that XAB was in trouble, they should find a way to solve their problem as soon as possible.
In accordance with Chinese legal system, equity transfer contract will be validity after agreement of China Securities Regulatory Commission(CSRC). Usually the CSRC will approve such application in 15 days, but the XAB-Greencool case seemed to be forgotten by the CSRC. With no agreement of CSRC, the contract between became worthless. This is the real reason why XAB canceled the equity transfer contract.
Because representatives from Greencool had presented as the board member of XAB. XAB was also investigated by relevant department when Greencool was involved in the financial case.
This story presented us XAB's careless in dealing with equity transfer. In the whole process, they have committed three serious mistakes. First, Know little about equity transfer regulations. In China, any equity transfer case should be approved by local Equity Exchange Center(EEC). But XAB did not hand in any applications to the local EEC. Second, No deep investigation aginst the contract party. When XAB decided to sign contract with Greencool, there were many negative report against Greencool and its president. Third, let representatives from Greencool be members of their board of director before the contract took effect.
(cbcc-yinx)
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
2.All news edited and translated by us are specially noted the source"CBCC".
3.For investors,please be cautious for all news.We don't bear any damage brought by late and inaccurate news.
4.If the news we published involves copyright of yours,just let us know.
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