The 110 days after the crash of Shenzhou Car Rental (00699)

After three months and eighteen days, the “China” earthquake triggered by Luckin Coffee’s (LK.US) self-explosive financial fraud finally came to an end with a seemingly successful ending.
On July 20th,
China Car Rental
(00699) issued an announcement stating that its two major shareholders, UCAR, Amber Gem (a subsidiary of Warburg Pincus, a US private equity investment company), had signed a share sale and purchase agreement with Jinggangshan BAIC on the same day. If the delivery is finally completed, BAIC will hold up to 28.91% of China Car Rental.
The seemingly simple announcement on a piece of paper hides the urgent twists and turns of the past three months. China UCAR has repeatedly sold China rental shares in the secondary market. Amber Gem changed from a rescuer to a seller, Lu Zhengyao resigned, and the takeover party changed from BAIC to SAIC and then back to BAIC. This series of changes reflects the “Shenzhou system” Difficult choices of capital under the pressing time.
Even if there is a BAIC takeover, the market does not seem to buy it. On the day after the announcement, the share price of China Car Rental fell by more than 8% against the trend.
After the game, who has the last laugh in this “big earthquake”?
Shenzhou car rental plummeted as the fuse of the “Shenzhou” capital turmoil
Back to April 2nd, Luckin Coffee issued an announcement to the SEC (US Securities Regulatory Commission) stating that it found that the chief operating officer Liu Jian was financially fraudulent. From the second quarter of 2019 to the fourth quarter of 2019, the fictitious transaction amount was as high as 2.2 billion yuan.
Once the news was announced, Ruixing Coffee’s share price suffered a severe setback, and it fused several times during the intraday trading session. As of the close of the market, it plunged 75.57%. The market’s sense of smell is extremely sensitive. After Luckin’s accident, the China Car Rental under Luckin’s major shareholder Lu Zhengyao was implicated.
On April 3, China Rent-A-Car dropped sharply at the opening of the market. It once fell to 1.2 Hong Kong dollars per share during the session, a decline of 72.09%. Under the sharp drop, China Rent-A-Car responded quickly and issued an intraday announcement stating that the company’s share trading had been suspended since 10:14 am. When trading was suspended, the decline in its shares narrowed to 54.42%, and the price was HK$1.96 per share.
After a day and a half of the suspension, China Rent-A-Car issued a clarification announcement stating that it did not hold any shares in Ruixing Coffee, and there was no commercial transaction between the two parties. At the same time, the announcement also stated that although Lu Zhengyao is the shareholder and chairman of Ruixing Coffee, he has resigned as the CEO of China Rent-A-Car and changed to a non-executive director in April 2016. Since then, he has not participated in the company’s daily management. And Liu Jian, who was reported as a fraud by Ruixing Coffee, has ceased to serve as the director of the China car rental department since 2015. And Shenzhou Car Rental said that its business development and operation with financial institutions remain normal.
After the announcement, the suspicion of the market was a little relieved, which caused the share price of China Car Rental to rebound sharply by over 34% when trading resumed on April 7.
Just as Shenzhou car rental “breathed”, a bigger trouble followed. At 6:49 am on April 9th, China Rent-A-Car issued an announcement stating that, according to the relevant financing agreement, several China-Ucar lenders required China-Ucar to sell 2.11% shares of China-Ucar on the secondary market on April 3. .
Behind the sale of 2.11% shares of Shenzhou UCAR was because UCAR used all of its shares (29.76%) in Shenzhou Leasing to pledge bank loans. After the pledged stock plummeted, he could only passively reduce 2.11% of the shares in China Car Rental.
It can be seen that the collapse of car rental in China has become the fuse of the capital turmoil of the “China Department”.
Old shareholders came out urgently to “fight the fire”
Obviously, after the collapse of China Rent-A-Car, China UCAR’s pledge guarantee has already generated risks. In the face of this situation, either financial institutions will force the pledged stock to reduce its losses, or China UCAR will repay the bank loan. The liquidation method is definitely not what Lu Zhengyao wants to see. After all, Shenzhou Car Rental has just plummeted. If it is liquidated, its stock price will definitely experience another round of plummeting, and repaying bank loans has become the best choice.
However, UCAR at this time has already fallen into a quagmire in its own development. Both the 2019 annual report and the 2020 quarterly report have been postponed and have not yet been released. The latest performance is the first half of 2019. During the reporting period, UCAR The income was cut in half, the net loss was as high as 653 million yuan, the ratio of current assets to current liabilities was only 1.14 times, and capital turnover was relatively difficult.
In order to repay certain existing financing, UCAR chose to sell