Written by: BG/Proofread by:wenxiaoming
According to Sina Finance’s report on August 3, China Huarong Asset Management Co., Ltd. (Huarong AMC), one of the four major state-owned bad debt management companies of the Chinese Communist Party (CCP), officially announced its plan to sell all its stake in Huarong Consumer Finance Company and restructure its equity in Huarong Trust.
Huarong AMC, now listed in Hong Kong Stock Exchange, is still suspended from trading over failure to file its 2020 annual report. Its interim financial statements as of June 30, 2020 showed the total assets of RMB 1.7 trillion with an asset-liability ratio of 90.3%.
As mentioned in its August 2 announcement, Huarong AMC is required by the regulatory authority to gradually exit the non-core businesses. Therefore, it will sell all its 70% stake in Huarong Consumer Finance for which Ningbo Bank is said to be a potential bidder.
Regarding Huarong Trust, it is among the few trust companies which have been in the red for years and an anonymous source revealed that its non-performing assets amounted to RMB 70 billion. Huarong AMC owns 76.79% of its equity and is out to restructure its liabilities through “debt-to-equity swap and equity transfer” but who has the interest and financial resources to take over such huge bad debts?
Based on Caixin’s report, what was announced is only the beginning of Huarong AMC’s long haul to dispose of its 7 subsidiaries as the regulatory authority requires it to shed these companies to stop the financial bleeding and return to its core business within this year. If its plan succeeds, its total assets will shrink to around RMB 1 trillion.
According to the analysis report from CICC FICC Research Team, Huarong AMC has accumulated tremendous risks in its subsidiaries: Huarong Huitong Asset Management, Huarong Industrial Investment and Management, Hurang International, Huarong Securities, Huarong Trust, Huarong Financial Leasing, etc., which have the commonalities of enormous credit exposure and high leverage. Their liabilities have to be settled through liquidation of assets whereas the qualities of their assets are dubious.
As is the case with many other state-owned companies controlled by the CCP kleptocratic families, Huarong has lost its valuable assets through underpriced transfers to and misappropriations by the CCP apparatchiks. What is left is an exsanguine body burdened with astronomical liabilities.
Huarong is only one of the 300 companies out of the top 500 in Mainland China and Hong Kong that are waiting for sequestration and insolvent liquidation, as revealed by Mr. Miles Guo in his August 2 broadcast.
Besides, the former CEO of Huarong AMC, Lai Xiaoming, who was executed this January for bribe-taking, corruption, and bigamy, was said to be the henchman of Zeng Qinghong, a retired Politburo member of the CCP, suggesting that Huarong is the coffers of the Zeng Faction just as HNA is to Huang Qishan.
This announcement before the upcoming Beidaihe Meeting of the CCP current and retired top leaders seems to signal a further escalation of the infighting between the CCP factions, of which Mr. Guo said the Zeng Faction could be the final winner – before the New Federal State of China declares the triumph over the CCP. Let’s sit by and watch this evil regime crumble.
(This article only reflects the author’s view)
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