Overhead management rights of the parent company and the treatment of 10 million yuan per year in the Yangon Times are fundamental reasons why the relationship between Brilliance China’s four senior executives and the new owner of Brilliance, the Liaoning Provincial Government, has been difficult to adjust. At the end of August 4, Su Qiang, President of Brilliance China (1114, HK), appeared in the Zilan Hall of the Great Wall Hotel in Beijing. Because the "Brilliance of high-level collective sales of shares, proposed to resign," the media has been made in full bloom, Su Qiang's appearances this time is to clarify. Su Qiang appeared in front of the media face lean, look stiff, completely without the style of the past in front of the media. The brief speeches of 6 and 7 minutes have been held in the hands of lectures and scripted texts. The words involved only the old topics of industrial development. However, there was no mention of the “disposal of shares†and “resignation†incidents in the rumor. When Su finished his speech, he looked up at the conference host next to him. The host immediately stood up and announced: “We are always busy and take a step forward.†In this way, the future of the Huachen Group and the fate of its current 4 executives The crucial clarification of the media will end in a hurry. From October 2003 to the end of July this year, four executives, including Chairman of Huachen China’s Board of Directors Wu Xiao'an and President Su Qiang, sold their shares. They were formerly the old part of Brilliance China’s former Chairman Yang Rong. So far, they have almost no longer held shares of the company other than holding the share options granted by the Liaoning Provincial Government. This move brought fierce market shocks, Brilliance China stocks fell sharply in New York and Hong Kong markets. On August 2nd, Brilliance China (1114, HK) issued an announcement in Hong Kong and New York at the same time: “The four directors did not resign and they sold their shares for 'personal reasons'.†But only on August 2 , Brilliance China evaporates 1 billion yuan in listed value on the overseas capital market on one day. At the same time as the stock price fell sharply, Brilliance China's turnover rose sharply to a record high. A person close to Brilliance China Management revealed that when the shares were placed in October last year, the management originally intended to exercise the share options immediately and sell them (while rumors pointed out that Liaoning Province was trying to sell shares), but at the time the interest rate was low and hot money was flooded. It is a good opportunity for Brilliance to issue convertible bonds. Management ultimately gives way to the company. However, after that, subject to the terms of the convertible bonds, management could not buy or sell company shares within 3 months (ie, by February of this year). Subsequently, Brilliance announced its performance in April. It was not possible to buy or sell shares for the previous month, only to delay again. However, after the performance, Brilliance's share price turned down and lost the best time. The "Financial Times" also received information from those close to Brilliance 4 senior executives who are close to the senior executives of Liaoning Brilliance Automotive Holdings Group (briefly Brilliance Group) and the Hong Kong investment bank: The four senior executives who have already resigned to Brilliance Group have now resigned. Returning to Shenyang, Liaoning Province has negotiated and negotiated a new round of negotiations. At present, the two sides have already reached a preliminary compromise: In order to maintain investor confidence, Su Qiang and others agreed to continue to stay in Brilliance China until the end of this year. The return of structural problems to the negotiations does not mean that the contradictions between the two parties can be completely resolved. According to a person close to Brilliance Group Chairman Yang Baoshan recently told the Financial Times that the fundamental contradiction and conflict between Brilliance 4 executives and the major shareholder of Liaoning Province did not come out in the last two years of cooperation. In June 2002, when Liaoning Province formally received Brilliance assets and negotiated with the four former Brilliance executives and promised the so-called “professional manager†conditions, it has already buried its hidden dangers. "This is a structural problem." In the past two years of cooperation, Su Qiang and other four people have always surpassed the parent company's management in terms of status, power, and salary. "The parent company has always been an empty shell." The person made a metaphor. The most prominent problem is that the parent company’s management power is completely overhead and the 4 senior executives follow the Yangrong period of 10 million yuan per year plus incentives. Allegedly, since Brilliance’s four senior executives had received the “Brilliance assets had been returned to Liaoning Province and all of the past benefits have been unchangedâ€, Brilliance China under the management of Su Qiang and others is still the chairman of Brilliance’s former Yang Huarong. There is hardly any difference between the times. "The parent company's opinion they never listen to." The details provided by the source can be corroborated. At least, there are poor communication between the Brilliance 4 executives, professional managers themselves, and Yang Baoshan, the chairman of Liaoning State Capital. It is said that after Liaoning officially received Brilliance, Yang Baoshan, chairman of the holding parent company Brilliance Automotive Group Holdings Co., Ltd., and Su Qiang, president of Brilliance China, faced each other in Shenyang's office. However, from the very beginning, the two of them spoke to each other very little and it was In the important meetings initiated by Yang Baoshan, Su Qiang and others often did not attend. Another “structural problem†is that these four senior executives have received almost astonishingly high salary and rewards from listed companies for almost two years. According to the Brilliance China Annual Report, the salary of the Brilliance 4 executives from 2001 to 2003 plus the amount of rewards has increased dramatically year by year. According to statistics, in the fiscal year 2001, the annual salary of four people was between 2 million and 2.5 million Hong Kong dollars respectively. Since the profits were slightly slipping 60 million yuan in the current year, Brilliance China’s former chairman Yang Rong decided that all directors will not issue bonuses; in fiscal year 2002, It was Liaoning Province's first year of formal takeover of Brilliance China. Although the management of the Soviet Union and other executives only exercised management power for half a year, and the company’s profits also fell by 28% to 636 million yuan, the personal salary income of the 4 executives such as Su Qiang and others. In the same year, it has doubled between 5 million and 6 million Hong Kong dollars. In addition, four people also received a total of 12.65 million Hong Kong dollars in bonuses in that year; in fiscal year 2003, four people such as Su Qiang were fully managed, and four people’s annual salary income ranged from 8.5 to 10 million Hong Kong dollars. Moreover, the bonus of four people (total) has nearly doubled from HK$12.65 million in 2002 to HK$23.16 million. In addition, the bonus for 2002 is HK$5.546 million. In addition to this, these 4 people are directors of Shanghai Shenhua Holdings (600653), and each of them has an annual income of more than 300,000 yuan from Shenhua. Such high salaries and personal rewards have made it impossible for the senior executives of the controlling parent company to balance. According to reports, executives of the Brilliance Group, the parent company including Chairman Yang Baoshan, still have a monthly salary of only RMB 4,000. "The loss of state-owned assets" is suspected to have news that the current Liaoning provincial government's attitude towards the 4 executives has begun to change significantly. The first change was reflected in the early subscription of options to 4 executives. On December 18, 2002, Huachen Group acquired a 39.4% stake in Brilliance China at HK$0.1/share, becoming the largest shareholder. On the same day, Huachen promised Wu Xiaoan and Su Qiang four other people to subscribe for new shares. As promised at that time, the 4 executives could subscribe for a total of 350 million new shares at the exercise price of HK$0.95/share, which represented 9.446% of the total share capital. If the option is successfully honored, according to the average share price of Brilliance China, Wu et al. will each receive 100 million to 200 million Hong Kong dollars in wealth. According to the announcement at that time, each call option could be exercised in whole or in part for three years from February 6, 2003. However, the 350 million new shares have not been honored so far, because the current Liaoning government has not agreed to transfer. A good reason is that Brilliance’s BMW project, the Chinese project, and the Brilliance Jinbei project, which still has a 30% market share, are the province's expectations for the province's manufacturing industry. The 9.44% share of management's shareholding is not a small figure, which undoubtedly means that it is reselling a pillar company in a key development industry to management. Moreover, it is sold at a low price of 0.95 Hong Kong dollars per share. Once it is questioned by the outside world as "the loss of state-owned assets," Liaoning will find it difficult to afford such a heavy responsibility. Then there was a dramatic scene: On October 28, 2003, Brilliance Motors signed a contract with Citigroup Global, which issued $170 million in 5-year convertible bonds and raised net funds of $164 million. At the same time, Citigroup purchased a total of 113.64 million shares held by Wu Xiaoan, Hong Xing, Su Qiang, He Tao, and Yang Maozeng at a price of 2.65 Hong Kong dollars per share. This part of the equity was paid by the former Chairman of the Board of Directors of Brilliance Yang Qiang to Yang Qiang, Wu Xiaoan et al. Su Qiang and others were originally in order to purchase Liaoning Province’s promised share options. But what they did not think of was that the stocks in the hands were sold out, but the 9.44% option of Brilliance China that could have been realized had been nullified. Moreover, the entire incident had evolved into a "sell-off resignation." More recent news shows that Liaoning is trying to introduce new shareholders, with the intention of breaking the "structural problems" that have been formed between Brilliance 4 executives and holding parent companies with the power of new entry. This will inevitably mean that the existing power space of Brilliance 4 executives will be greatly constrained or reduced. Obviously, regardless of whether the position of the executives of the 4 executives can continue, the unintentional sell-off of the shares by the 4 Su Qiang and other companies has become the last weight to exert pressure on the major shareholders. As for the final weight there are multiple. Maybe there will be an answer by the end of the year.
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