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Guangdong Midea and comparison with the revelation of the Erie shares MBO

Author: BianXiaoDong From: www.yourpaper.net Posted: 2009-10-31 14:40:11 Read:
Abstract: select GuangDong Midea Erie MBO both cases as the object of study, analysis of the problems existing in the financing of listed companies in China: capital markets are underdeveloped; related to financial sector development lag, lack of strategic investors; imperfect legal MBO leveraged buyout caused a huge obstacle; funding sources information transparency, disclosure norms. Countermeasures to solve the above problem is to improve the relevant laws and regulations, so that MBO financing laws to go; establish and perfect the mechanism of the exit of the listed company MBO financing; solve option pricing problem as soon as possible, and further establish a sound credit system.
Keywords: Guangdong Midea; Erie, MBO; corporate governance


Introduction

With the steady progress of the structural adjustment of property rights in China, MBO of theoretical and practical circles recognized and valued, although management buyouts in China is just in its infancy, but there have been several ups and downs. China's specific national conditions, some problems do exist in the actual operation of the MBO. Especially the underlying value of the company generally far exceeds the ability to pay for the acquisition of the main, requires a series of financing programs to solve, but due to the lack of financial instruments and related policies and regulations restrict the acquisition of funding is difficult to obtain through legitimate channels. Difficulties in financing has become a bottleneck restricting the operation of our MBO. Due to the acquisition value of the subject matter is generally far beyond the acquirer's ability to pay the actual operation of the MBO, the management often can only afford the purchase price of a small part of the majority of the amount necessary financing to make up, so financing management buyouts key success. Restrictions due to the lack of financial instruments and related policies and regulations, the acquisition of funds is difficult to obtain through legitimate channels, has been the financing difficulties become major constraints on our MBO smooth.
So far, many scholars and researchers for listed companies in China MBO financing of research and discussion, involving a wide range, including legal considerations, financing, policy and institutional financing channels, financing innovation in many fields.
Mao Yi Ping (2004) selected has been publicly disclosed information 6 implementation of MBO of listed companies to conduct empirical research. Acquisition funds constitute the intermediation channels and gap funding to analyze proposed MBO of Listed Companies in China may be the five financing channels of financing options for credit. Classes Woodland (2005) by supporting the MBO financing and legal research that Wang Songtao (2004) on the financing of existing financial regulation and too many should reform lending restrictions, to relax equity pledge and other means to solve them; models risk, financing activities of the black-box operation, etc. put forward should be as soon as possible to take measures specification point of view of the management buyout financing problems; Yang Cheow Tong, paragraph red (2004) from the financing structure of the angle of MBO do explore that pluralism external financing is key internal ownership structure and control of structural transformation; financing innovation, Xiao Tong (2005) to do research, and the need for the financing tool innovation proposals from internal financing and external financing two angle; Shao Yanbo (2004) compared the management buyout of the domestic and international financing mechanism proposed should make great efforts to cultivate institutional investors point of view.

Given the smooth progress of the split share structure reform in China, some of the effects of the management of listed companies acquired institutional factors and legal factors gradually improve, MBO again become the focus of attention in academia. In this paper, on the basis of the above study, MBO financing problems are discussed. In the second part and the third part of Review and comparison of Guangdong Midea and Erie shares MBO made; fourth section discusses the main problems in the MBO process of China's listed companies and relevant policy recommendations.

Case history

(A) Guangdong Midea MBO process outlined
April 15, 1998, by the the the Beijiao government investment and the assets, authorized to manage the town Beijiao, Shunde City Investment and Development Co., Ltd. was established. August 28, 1998, the Investment Development Corporation of the transferee Guangdong Midea 9 2,884,870 legal person shares, accounting for 28.07% of the total issued and outstanding share capital, became the largest shareholder of beauty. October 28, 1998, Beijiao, Shunde City Investment and Development Co., Ltd. changed its name to Midea Holding Co., Ltd., Shunde City.
June 4, 1999, as the legal representative of the Xiangjian son of Jianfeng Hoi Luen Industrial Development Co., Ltd. was established agreement transferee the Beijiao economic development held by some promoters legal person shares of 3,432 million shares, representing the total share capital of the Guangdong company of 7.98%, to open together to become the second largest shareholder in the United States.
April 7, 2000, a joint venture set up by the Group's management and trade unions U.S. Trust & Investment Co., Ltd., Shunde City. It is jointly funded by the management of the Company of Guangdong Midea Xiangjian 22 managers and unions established in the registered capital of 0,368,700 yuan, legal representative Xiangjian. Which company management personnel held by the U.S. depositary shares representing approximately 78% of the total share capital of beauty care, unions hold the remaining 22% stake.
May 10, 2000, United Trust & Investment Co., Ltd., with the former largest shareholder of Guangdong Midea Midea Holding Co., Ltd., Shunde City signed the "Equity Transfer Agreement", U.S. Trust & Investment Co., Ltd. and price of 2.95 yuan per share, the Agreement shall be subject to let Midea Holding Co., Ltd. holds 518.4 million shares, accounting for 7.25% of the total share capital, becoming the third largest shareholder of Guangdong Midea, which opened the prelude of the management buyout of Guangdong Midea. Of the legal person shares of the cost of acquisition is less than 100 million yuan, 10% of the float money management paid cash down payment and the remaining 90% through installments solve. Financing channels for equity of care to the United States pledged to secure loans from rural credit cooperatives, beauty care investment has become the third largest shareholder of Guangdong Midea.
The December 20, 2000, United Trust & Investment Co., Ltd. Holdings Limited with the United States once again signed the "Equity Transfer Agreement" United Trust & Investment Company is $ 3 per share price of the transferee 7 243.0331 shares of the holding company in the United States. Upon completion of the equity transfer, U.S. Trust and Investment officially became the largest shareholder of Guangdong Midea rose to 22.19 percent of shares held, on behalf of the local government of Shunde Midea Holding Co., Ltd. shares gradually transferred to the management of natural persons by Guangdong Midea Holding the hands of the United Trust & Investment Company.
January 19, 2001 again transferee holdings of U.S. Trust Investment Holdings Limited in the United States held part of the corporate shares transferred to the investment company. The transfer of shares accounted for 14.94% of the total share capital of the Company in the United States. After the transferee, U.S. Trust Investment, and Shunde open associated Guangdong Midea, the second largest shareholder, the two companies are the management of Guangdong Midea Holding company. Midea Holding Company held by the United States of 200 million shares of corporate shares to become the third Dafa shareholders.
June 21, 2001 and June 27, Midea Holding Co., Ltd., Shunde City will be held by some remaining options were transferred to the Investment Management Co., Ltd. of Shunde Beijiao, and Shunde City Nobuhiro Industrial Co., Ltd., Shunde City Beijiao people the government completely give up the equity interest in Guangdong, the United States, to pull out entirely from Guangdong Midea Holding position.
After after MBO Xiangjian two ways holdings Guangdong Midea, the largest shareholder the Xiangjian investment as beauty care, holds 25% of the shares of United Trust & Investment Company indirectly holds the shares of Guangdong Midea; second is Xiangjian as executives in the United States directly held shares of Guangdong Midea. Other GuangDong Midea senior management is through two identical holdings Guangdong Midea.
(B) The the Erie shares MBO process outlined
1 event procedure
March 18th, 2003, the announcement of Erie shares, Kinghing will transfer the former major shareholder of state-owned shares held, to become the new major shareholder. Ministry of Finance announced on April 8, 2003 to obtain approval. July 2003, Kinghing, invested 280 million yuan to 10 yuan / share of state-owned shares account for 14.33% of the Erie shares in the hands of the transferee from the Hohhot Finance Bureau, officially became the first large shareholders in Erie. White Erie shares, to fulfill the promise of its beginning, did not send any of the directors, supervisors and other management personnel.
In October 2002, the Queen chairman Zheng Junhuai proposed the idea to buy bonds on the board of directors, began in November, Ely points five times into the subsidiary, animal husbandry, Quan Yuan Xing company funds for Jintong securities investment in bonds, totaling 280 million yuan, and the total amount of funds used by the state-owned shares of 14.33% Kinghing transferee Erie shares.
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