Chapter 28 Wang Shi's Self-Report: The "War of Kings" in 1994

After confirming the goal of taking real estate as the leading industry, Vanke’s real estate projects have sprung up like mushrooms after rain: the first batch of owners of Shanghai Vanke City Garden, Shanghai Vanke Plaza and Shenzhen Lijing Building were completed; Qingdao Yindu Garden was basically completed; Beijing Vanke City Garden and Tianjin Vanke Center were launched for sale, and the market responded enthusiastically; Anshan Dongyuan Building was topped out, Shenyang City Garden started construction, and Shenzhen Poseidon Plaza broke ground.Some of these projects have become masterpieces worthy of being painted in the history of Vanke, and some have become experiences that Vanke needs to reflect deeply.

However, the fierceness of the storm this year has never been seen before. In April 1993, Vanke publicly offered B shares. In the 1990s, the economy of mainland China was more and more open to the outside world. The B-share category was specially designed to attract overseas investors, and only overseas funds were allowed to enter the market.As soon as the new product was launched, it attracted great attention from Hong Kong securities companies. Although the market prospect has a lot of unknowns, which securities company that uses Hong Kong as a springboard for the mainland would be willing to miss the opportunity to take the first bus?

According to the guiding principles of the securities management department, Vanke issued a price-earnings ratio of 13.3 times, which was higher than market expectations.However, hope is the most precious thing, and there is Junan's face in the distribution team. The profit of securities companies underwriting corporate stocks comes from the underwriting handling fee, which is charged as a percentage of the underwriting amount. The ratio depends on the scale of financing, peer competition, and issuance risks.Vanke issued 45 million shares at HK$10.53 per share, raising HK$450 million, with a handling fee of 5% (fee 2% + commission 3%), which is relatively high.

The market's recognition of B shares does not make the company optimistic.As the subscription deadline approaches, a considerable proportion of stocks have not been subscribed, and the market is not optimistic about B shares.After the company responsible for issuing shares formally signs the underwriting agreement, the risk of whether its shares can be sold smoothly has been transferred to the underwriter. According to the agreement, the underwriter must pay for the remaining unsubscribed shares.In theory, regardless of whether the market is good or bad, Vanke can receive 450 million Hong Kong dollars as scheduled, and it is only a matter of face that it cannot be fully subscribed or oversubscribed.

However, the top executives of Vanke are still worried about the solvency of Junan Securities, a securities firm with more than enough momentum and lack of funds. After all, Junan was also the B-share underwriter of Jintian Company during the same period.My intuition tells me that Junan Securities cannot lend such a large amount of funds in such a short period of time.But in fact, both Vanke and Jintian received the full-rated B-share funds for sale within the time limit. In May 1993, Vanke's B shares fell below the issue price after the opening of the market, and the underwriter's B shares were also in their hands. As a result, Junan became one of Vanke's major shareholders.Two months later, Zhang Guoqing, the general manager of Junan Securities, suggested that Vanke should give Junan Securities a fee to solve the urgent need caused by short-term fund lending.Obviously, it is very inappropriate to misappropriate the funds raised to lend to securities companies, and it also obviously violates the original intention of issuing B shares.

I refused. At 10:30 am on March 30, 1994, I welcomed Zhang Guoqing, general manager of Junan Securities, and Zhang Hansheng, vice president of Junan Securities, two guests who made an appointment in advance. Zhang Guoqing cut to the chase, "Junan Securities is going to give some advice to Vanke's management." "Okay", is it necessary for the first and second in command to come together to make an opinion?I feel a little strange. "Junan is going to hold a press conference in the afternoon. It will formally put forward its opinions on Vanke. Don't get me wrong, I have no other intentions for you, Wang Shi. We think that Junan is representing small and medium-sized shareholders to give advice on Vanke's business strategy, and it will be of great help to Vanke's long-term development. Development is beneficial, and it is also beneficial to you, Wang Shi, and it is obviously beneficial to the development of China's securities market."

These words really made people feel sudden, obviously with a strong taste of gunpowder. "Can I attend the press conference in the afternoon?" I stabilized my emotions and just asked a question. "You don't want to participate, it's just because you want to give Vanke an opinion, please let us know in advance." "Since he is giving advice to Vanke, why can't the chairman of Vanke participate?" I felt more and more that the visitor had other intentions and ulterior motives. "There is no problem if you want to participate. Since it is an innovation, the comments are in the form of 'A Letter to All Shareholders of Vanke', and it will be published in the Shenzhen Special Economic Zone News tomorrow, proposing to reorganize the board of directors. The form is more drastic, but it is still for the good of Vanke. .After the reorganization of the board of directors, you will still be the general manager."

Everything became clear, and I sent the two bosses away quietly, unwilling to say a word.Because, the time for Vanke to prepare the correspondence is only two and a half hours. I immediately called the directors and asked if they knew about this matter. Within 30 minutes, I got in touch with 13 directors in the United States, Canada, Beijing, Qingdao, Haikou and other places.To my great surprise, all the directors, including the new generation, were aware of the situation and participated in it.This made me suddenly realize that Vanke's mentality after the successful issuance of B shares was too arrogant, and Vanke was completely unaware of such a sudden hostile takeover of Vanke!When I called Zhang Xipu, the general manager of the new generation, Zhang Xipu also replied that we also participated in this proposal, which is a good thing for Vanke.I was surprised and angry at the time, "Support Junan at this time?! Why are you so confused! You can't participate!" In addition, I also got the same information from Zhongchuang Shenzhen Company and Hainan Securities, which are both directors of Vanke and Junan. A disturbing answer.

At 3 p.m., Junan Securities held an emergency press conference at Sunshine Hotel in Shenzhen.At the beginning of the meeting, Xie Wei, the director of the office, pointed the finger at Vanke's board of directors, saying that the four shareholders entrusted by the representatives were Shenzhen New Generation Enterprise Co., Ltd., Hainan Securities Company, Hong Kong Junshan Investment Co., Ltd. and Chuangyi Investment Co., Ltd., the four companies A total of 10.73% of Vanke's total shares are held. "Letter to All Shareholders of Vanke Enterprise Co., Ltd." firstly gave a general introduction to Vanke's business situation, corporate structure, share capital composition and stock trend, and analyzed Vanke's five major industries of real estate, equity investment, industry, trade and cultural management one by one situation.Afterwards, the proposal questioned Vanke's problems in its operation and management, such as insufficient business transparency, ineffective participation in Shenhua Company, poor real estate business performance, and unstable equity investment profits, pointing out that Vanke's "real estate-led, The industrial structure based on trade, with equity investment as the pillar, cultural management as the facade, and industrial management as the supplement" has dispersed the company's resources and management focus, and has been unable to adapt to modern market competition.Therefore, at the end of the proposal, it is proposed to restructure Vanke's business structure and management, including shrinking trade, commercial and industrial operations, separating Anhua Company and equity investment companies, fully developing and enriching the real estate business, and announcing that it will recommend Eight to ten director candidates will join the board of directors, and strive to set up a permanent project approval committee within the board of directors to supervise major policies and avoid and reduce the blindness and randomness of projects.

The content of more than 10,000 words took an entire hour to read.As soon as Xie Wei finished reading, I asked to speak, but was not allowed.This situation made the reporters dissatisfied, and they all said, "Let Wang Shi speak." Due to the atmosphere of the meeting, Junan had to let me speak. First of all, I would like to express that shareholders are welcome to express their opinions, and emphasize that Junan's actions this time are neither acquisitions nor holdings.Moreover, 80% of the reform proposals proposed by Vanke are consistent with the resolution of the board of directors held by Vanke on the 29th.More than 95% of Shenzhen companies are comprehensive types, which is not only a feature, but also a weakness. Like Vanke itself, many of the existing industries are not just suppressed, but reduced.Vanke's equity investment industry has a high return rate, and its own value cannot be easily denied. Its advantages and disadvantages can be understood from a practical point of view.I went on to point out that the lack of transparency of the industry mentioned by Junan has different meanings from the transparency of corporate management. The lack of industry characteristics and the lack of clarity of the company's situation are two different things.Finally, I clarified my opinion: I will talk about the further reaction on this matter at the press conference held at 2 pm on the 31st.

Although I acted calmly and answered decently, deep anxiety still gripped my heart.The reason for the uneasiness is simple: Junan's motives are very obvious. By preventing Vanke from controlling China Vanke, it can manipulate the stock trend.If the stock price rises the next day, Vanke will definitely fall into the hands of Junan.You know, stockholders want the stock price to rise, and Junan’s reorganization of Vanke is a pretty good theme for stockholders who don’t understand the situation—the market doesn’t know that Junan intends to acquire Vanke, only that Junan is making institutional innovations , suggesting a reshuffle of the board of directors.As long as the stock price rises, it will prove the correctness of Junan's opinions, and the general meeting of shareholders will be held logically. Once the meeting is held, it will be the time when Vanke changes ownership. So, the only thing we can do is apply for suspension!During the suspension period, the market will be encouraged to fully digest these news.As long as the market thinks this is not an acquisition subject, Vanke's share price can remain stable.The new generation owns 6.2% of Vanke's shares, Hainan Securities Company accounts for 1.1%, Junshan Investment and Chuangyi Investment jointly account for 3.43%, and Zhongchuang Company accounts for 3% of Vanke's shares. If Vanke can win the shares of other shareholders at the same time Support, and strive for some shareholders who initiated the declaration to withdraw from the authorization, and then they can successfully repel the menacing Junan. While meeting with some shareholders, I made an appointment with Zhang Xipu and continued to communicate with him. At around 9:00 p.m., Zhang Xipu finally agreed to sign the statement of withdrawing from the entrusted shareholder team.Ma Gongyuan, who was then director of the Property Rights Management Department of Shenzhen Investment Management Company, also clearly expressed his support for Vanke. At 11 o'clock in the evening on March 30, Deputy General Manager Zhao Xiaofeng and I rushed to Junan headquarters in Shenzhen Development Center Building overnight to communicate with each other with a statement signed by Zhang Xipu.Undoubtedly, according to the current situation, as the new generation of shareholders holding 6.2% of Vanke shares, as long as he withdraws from the list of proposals, it will be difficult for Junan to control 10% of the shares. The request of the General Assembly cannot be established.To my surprise, Zhang Guoqing came up with a power of attorney for a new generation authorizing Junan to act as a financial advisor for reform initiatives!It turned out that Junan had already completed a series of careful planning and preparations with legal effect without Vanke's knowledge.At the same time, Junan has hired CITIC, which has strong connections and professional capabilities, as its legal counsel. After returning to the company, Vanke's top executives hadn't left yet, so we discussed and studied countermeasures all night. On March 31, a wrestling kicked off quite dramatically with the "Letter to All Shareholders of Vanke Co., Ltd." and Zhang Xipu's statement announcing his withdrawal from the initiative, which were simultaneously published in the Shenzhen Special Economic Zone newspaper. In the morning, Vanke replaced its legal advisor with stronger capabilities. A Hong Kong law firm responded to the Wanyan letter, and invited Gu Gengmin, one of the drafters of the Securities Law, to help us study countermeasures.Moreover, Wang Xinmin, the general manager of the Shenzhen Special Economic Zone Development Company, also authorized Vanke to exercise the voting rights to exercise shareholders’ rights and interests. Vanke also quickly obtained exemptions from the Securities Management Office and the Shenzhen Stock Exchange, and was able to disclose the company’s performance at the afternoon meeting. The phone call with Ning Zhiqiang in the morning confirmed one of my previous suspicions: During our discussion on the night of the 30th, I felt that Junan’s sudden attack was not for mergers and acquisitions, but an acquisition that appeared during the reorganization process. The concept, if this assumption is true, Junan is not launching an attack for buying, but for selling.Then, if such a transaction is carried out, I am afraid that there must be a position established in advance based on internal transactions in the stock market.After verification, we found that there were two positions, one in Dandong and the other in Taiyuan.And these two positions were established in Junan Securities Company, and the investor of these two positions was none other than Ning Zhiqiang. At 2:00 p.m., at the Industrial Building on Shuibei 2nd Road, Chen Zuwang, the then deputy general manager of Vanke, and Yu Liang, the general manager of Vanke Finance Co., Ltd., and I appeared on the stage at the same time.Let me make a brief statement of the company's situation first, and then launch a counterattack. Let me first say that Vanke has many doubts about Junan's practice of publishing the "Notice to Shareholders" and "Reform Proposal" in multiple newspapers.According to the company's understanding of the situation, the new generation has already withdrawn on the 30th, and on the 31st it issued a statement canceling the authorization of Junan as a financial company.And Hainan Securities has never formally entrusted Junan as a financial advisor to carry out such activities in writing. At the same time, Vanke’s board of directors has only 14 members, and 8-10 directors were elected at the same time in the proposal. Obviously, this move is to hope to spend the least cost on the whole. Take over Vanke. Moreover, although Junan's proposal is professional in terms of format and method, there are many inaccuracies in the specific content. For example, the planning of Shanghai Vanke's urban garden is just a repetition of the opinions of an employee of the company.As a professional financial report, its analysis and arguments are only based on the level of an internal Vanke employee's opinion on the company, and its producer obviously cannot stand scrutiny in terms of professional ethics and professional level. And real estate development is still Vanke's main business. In 1993, the number of Vanke's real estate projects, whether it was started or completed, was the highest in history. In the next five years, real estate will still be Vanke's leading business.In terms of equity investment, Vanke has used a total of more than 13,100 yuan, and has withdrawn more than 95.4 million yuan. The funds still occupied are less than 40 million yuan. Among the 27 companies invested, 9 have been listed in Shenzhen and Shanghai. In the 1993 dividend plan of the 12 holding companies, Vanke's cash interest income alone reached more than 4.52 million yuan. Chen Zuwang then presented the financial situation released by the Shenzhen Stock Exchange, which showed that Vanke still exceeded its profit in the macro situation last year. The total assets grew from 960 million yuan at the end of 1992 to the current 2.1 billion yuan. Value, shareholders' equity also more than doubled. At the meeting, Vanke made it clear that it had applied to the Shenzhen Stock Exchange for a one-day suspension tomorrow on the basis of today's suspension. The reporters in Shenzhen were both excited and confused: What exactly is the conflict between Junan and Vanke?How was the Junan proposal drafted?The new generation also jointly announced the reorganization of Vanke yesterday, and the shareholder report in the newspaper also had the name of the new generation, and today they entrusted Wang Shi to announce their withdrawal?what the hell is it? I am very clear in my heart that Junan still holds the trump card, and the 6.2% stake entrusted to Junan by the new generation is still an insurmountable hurdle.Zhongchuang Company has withdrawn, and the attitude of holding 1.1% of Hainan Securities and 2% of state-owned shares has become the key to Junan's success in holding a general meeting of shareholders.At that time, the state-owned shares were managed by Li Decheng, who is now the chairman of the Chinese People's Political Consultative Conference.When Junan and Vanke raised their expectations at the same time, Li Decheng chose to abstain. Subsequently, Hainan Securities also withdrew from the ranks of the joint statement.At the same time, on Friday, April 1, China Vanke once again won a trading suspension. In the afternoon of the same day, Shenzhen New Generation Enterprise Co., Ltd. held a press conference at Shenzhen Sunshine Hotel, explaining to the public the whole story of its authorization of Junan as a financial advisor and then canceling it, and then authorized me to be the spokesperson for the press conference for New Generation. Before leaving, Zhang Xifu said that the new generation had entrusted Junan Securities as the company's financial advisor on March 28, but the new generation made the entrustment due to lack of professional knowledge of securities and the company's internal knowledge. month to september. I made it clear that Vanke does not want to see small and medium shareholders suffer losses due to certain operations in the stock market.He also cited proof that within a week before the incident, many shareholders who had never held Vanke shares suddenly bought a large amount of Vanke shares.Since the development of the mainland securities market has only just started, there are indeed some unsatisfactory places within the listed companies, but I hope everyone can understand.Vanke shares will also resume trading from next week. Junan, however, was unwilling to fail, and continued to organize symposiums, stating that as long as Junan represents the interests of minority shareholders, and as long as there is a shareholder entrusting one share of Vanke, Junan will continue to act as a financial advisor to Vanke shareholders and exercise the rights of minority shareholders. right.Later, it will continue to solicit the voting rights of Vanke shareholders at the general meeting of shareholders. It can be said that although Vanke has seen the light.But at this time, the air was still like a piece of iron, pressing heavily on everyone's hearts.That night, a group of executives from Vanke at the time got together to eat lunch and discuss countermeasures.Suddenly, someone stood up abruptly, "How can you save Jun'an, let's go out and have a good meal!" As a result, a group of people flocked to Wuhe to eat the first "big meal" in several days . Early Saturday morning, the China Securities Regulatory Commission officially issued a red-headed document, which put pressure on the Shenzhen Stock Exchange due to possible involvement in insider trading, and agreed to suspend trading again.Jun An never thought of this move.With 4 consecutive days of trading suspension, plus 5 days in total on Sunday, the market has been able to digest the flood of information, and the stock price cannot be manipulated at all. Vanke also issued another announcement on this day, explicitly countering Junan's behavior. By the time the market opened on Monday morning, almost everyone who had seen it was watching the stock.At the opening, Vanke's stock started to rise, then paused and then calmed down.I looked back at my colleagues, "The battle is over." All is at peace. Afterwards, the "Vanke" weekly magazine published "Some Doubts About the "Junwan" Incident", which is enough to show the company's attitude towards this matter: The "Junwan incident" was fully affirmed by ordinary people because it put forward the proposition of "exercising shareholders' rights".After carefully considering the whole incident process, I feel a few doubts—— First, is Junan a financial advisor or a shareholder of Vanke?With the evolution of the incident, the relevant major shareholders, New Generation and Zhongchuang withdrew from the initiative one after another. Hainan Securities has never been officially authorized, and the shareholder units represented by Junan are actually Junshan and Chuangyi, accounting for Vanke 3.17% of the total share capital.According to Junan itself, these two companies are affiliated companies of Junan, and Junan is its equity holder.Therefore, Junan said that it was entrusted by some shareholders of Vanke, but it actually entrusted itself. Whether this approach is appropriate is debatable.The point is that Junan has repeatedly emphasized its status as a financial advisor, trying to show the neutral nature of its actions, which makes people puzzled.In fact, this has misled the public. Second, can the restructuring initiative be established?As we all know, in May last year, Junan was the domestic lead underwriter of Vanke's B shares.As an underwriter, it is obviously necessary to promise investors that the company it recommends has good operating performance and management quality.Less than a year later, Junan's restructuring initiative almost completely negated Vanke's industrial structure and management capabilities.In the absence of major changes in the operation and management of Vanke, Junan made two completely different conclusions on the same object in less than a year. Is this behavior responsible to investors and the public?Is there anything worthy of review in terms of professional conduct? Third, is it legal to publicly disclose business information of listed companies?Relevant securities laws and regulations have very strict regulations on the information disclosure of listed companies.The information release of listed companies is often reviewed by auditors, approved by securities management agencies, and released by the board of directors and bears legal responsibility for the content of the information.The practice of publishing proposals directly through public media as a financial consultant lacks rigor in the content itself, and there is no corresponding limitation of liability in the way of disclosure. If this practice is not restricted, it will inevitably lead to confusion in the securities market. Fourth, can securities firms accept discretionary mandates from clients? Paragraph 3 of Article 50 of the "Interim Provisions on the Administration of Securities Institutions of Shenzhen City" issued on June 25, 1991 expressly prohibits securities firms from accepting discretionary entrustment from clients.However, what Junan Company signed with its authorized shareholders was a carte blanche agreement, which obviously violated the regulations. Fifth, is it appropriate to propose a major reorganization?According to international practice, the proposed major restructuring of a company generally occurs only in the following two situations: 1. When there is a major change in the shareholding structure, the absolute controlling party may propose major restructuring of the original company in accordance with relevant regulations. 2. The company is facing serious financial difficulties due to poor management, or even on the verge of bankruptcy. The creditor can propose a major reorganization of the original company after a court ruling.The purpose of this practice is nothing more than to ensure the normalization and continuity of the company's business operations.Obviously, Junan did not obtain an absolute controlling stake in Vanke. In its proposal, it called Vanke an excellent listed company, but it proposed a major restructuring of Vanke, which is really puzzling.As we all know, even if a major restructuring is carried out on a company that is still operating normally, the damage and consequences will be very serious, let alone an excellent company? Sixth, who can represent the interests of all shareholders?Junan issued a reorganization proposal, raising the banner of representing shareholders' rights and interests.In fact, the shareholding structure of listed companies is diversified. State-owned shares, legal person shares, public shares, A shares, and B shares, different shareholders have different perspectives, and there are obvious differences in interest motives among them. For long-term development, such as state shares, some focus on short-term returns, such as social public shares and some legal person shares.For the profit distribution plan, different types of shareholders have different preferences. Public shareholders like to give more bonus shares, and shareholders of state shares and B shares like to give cash.Various shareholders also have different views on the company's industrial structure. Foreign shareholders like companies with more specialized businesses, especially basic industries and industrial companies, while domestic shareholders mostly like companies with flexible business scope, especially real estate companies.So it doesn't make any practical sense to talk about representing shareholders in general.Of course, different types of shareholders have the right to express their opinions and suggestions. The key is to act in a regulated manner, otherwise it will definitely interfere with the operation of the listed company and damage the interests of other shareholders. "This society has considerable expectations for me. I can't help myself now. Before 2003, I told myself that I must maintain my independence in essence, but it is difficult now. I strongly feel that the media and shareholders have begun to demand I remain objective and independent in substance as well as in name."