2003: Starting with Foreign Trade

Chapter 544 Flash Technology Share Reform
"The revenue and net profit have indeed dropped significantly, and the debt-to-equity ratio is also quite high. It seems that this company is really in trouble."

To calm himself down, Xie Junhong turned on his computer and carefully read through Changfeng Group's financial report again, even though he had seen it many times before.

"The idea is bold, but it's also quite feasible. How do I and the district need to cooperate? But are you really not going through the normal listing process?"

Although the backdoor listing is considered part of the district's performance, the main body of the listed company is still in Hunan Province for the time being, which is somewhat regrettable.

Tan Jincheng curled his lip: "With the stock market falling like this, IPOs will definitely be suspended soon. Can you even imagine normal listings?"

If IPOs are suspended for a period of time, the listing process is basically over.

Tan Jincheng is not very familiar with the IPO situation after the stock market crash in 2008, but suspending IPOs after a crash is a common practice, and it is the same in any period.

"That's true. After such a sharp drop, we need to use a suspension of IPOs to ease the emotions of investors. Let's go with a backdoor listing then. How do you need my cooperation?"

Since last year, Beicang District has focused on assisting local companies in achieving listing on the stock exchange. Beicang City Investment Group has played a crucial role in this process, handling many matters that the district was unable to handle directly.

FlashTech is the most important of all, especially since the city investment company holds a 5% stake in FlashTech, which is related to its own interests.

"The city investment company should have trust or fund institutions to help acquire some shares of Changfeng Group and Shuguang Auto in the market. It would be better if it were a newly established fund, so that it would be cleaner."

"That's no problem. We can set up a new fund investment institution and buy some car company stocks under the guise of investing in the automotive industry."

The district has instructed the city investment company to cooperate with FlashChe as much as possible without violating regulations. There is absolutely no problem in establishing a new fund, and there will also be returns on the investment.

"Setting up a new fund takes time and registration, so it might be a bit late. Is there enough time?"

Having dealt with Tan Jincheng for a long time, Xie Junhong knew that the kid was good in every other way, but he always talked about the importance of efficiency. He seemed to be in a hurry in everything he did, and it was often difficult to keep up with his pace.

"No rush. You can start building your position in the second half of the year. It will take several months to digest the National III emission standard. These months will definitely affect the profits of all car companies, and their prices will fall further. You can start building your position in June."

ByteDance's own asset accumulation will begin after June. The first half of the year will only involve due diligence, negotiating cooperation, and making some preliminary preparations.

Xie Hongjun said with no small amount of envy, "Ha, it seems that the second and third listed companies in Beicang District are yours."

The process of a backdoor listing is relatively simpler. If negotiations begin now, the listing could happen as early as the beginning of next year. Orange Technology's final prospectus is already under review.

Several days have passed, and there haven't been any new inquiries from Nasdaq. It must be the final version, and now we just have to wait for the official listing.

Shenzhou Group is the first listed company in Beicang District, and currently the only listed company there.

It's a bit embarrassing to admit, but Ningbo has such a developed industrial sector and many listed companies, yet Beicang District only has one listed company, which is somewhat of a drag on the overall economy. This is also why we made great efforts to support companies in the district last year.

"Aren't there any other companies providing guidance? Logically speaking, with such favorable policies last year, many companies that meet the listing standards should have applied."

"There are quite a few, but they all apply for listing through the normal process, so they are definitely not as fast as Flashcart; as far as I know, the most likely candidate is Ligong Environmental Technology, which is listed on the SME board."

Tan Jincheng nodded. In the days before the Growth Enterprise Market (GEM), the SME Board was the fastest way for many companies to go public. Even Ningbo Bank could only choose to list on the SME Board, claiming to be the first bank to list on the SME Board.

Who wouldn't want to go for the motherboard market if it's available for sale? It's all because the process is too complicated.

However, these days, the quality of companies that can go public, especially those listed on the main board, is still quite good, as the listing review process is too complicated.

Tan Jincheng smiled and said, "Actually, since last year, I have no intention of going through the normal process. At that time, I was planning to use a backdoor listing. Although it would be much more expensive, it would just be a matter of using some extra funds to buy time and make things simpler."

The simplest and ideal way to go public through a reverse takeover is like buying a supermarket and running it yourself. It is much more convenient than looking for shops and channels everywhere. Apart from the extra transfer fee, there are no problems.

Under the approval system, shell companies of listed companies are highly sought after.

"Goodness, you're really tight-lipped. You didn't tell me about the meeting last year, and you're only telling me now. You made me run around doing this for a while now," Xie Junhong said, his eyes wide.

"So, when President Huang went to Xiangcheng for research last year, you had your eye on Changfeng Group?" "Yes, although Changfeng Group is not the best shell company, it is the most suitable company for Shanchi's car manufacturing path. Besides it, there is probably only Great Wall Motors, but I can't afford Great Wall Motors."

"You've got a point in doing two things at once: a backdoor listing and car manufacturing."

Xie Junhong has lost count of how many times he has exclaimed today that young people's business thinking is truly imaginative and bold. Whether it's going public through a backdoor listing or manufacturing cars, both are extremely difficult things, yet he has managed to combine the two.

As the major shareholder of Flash Group and Flash Technology, Beicang City Investment cannot be considered insider trading in this matter, as it was Tan Jincheng's decision-making. However, when it comes to the backdoor listing stage, shareholders should be notified.

Besides Beicang City Investment, FlashTech's shareholders also include Wang Qinghua and Jin Chuanling, who each hold 5% of FlashTech's shares. They initially used cross-shareholding to achieve a share swap with two key suppliers.

The formal listing plan has been launched, and it's time to inform them.

Boss Tan can be quite domineering at times. Even though there are other shareholders in the company, he doesn't allow them to question the company's rules at all, and he insists on doing things his way even if they make a mistake.

Of course, he also maintains the principle of never interfering with the business strategies of companies he controls or holds shares in, such as Wang Qinghua, Jin Chuanling, and Zhang Mingcan.

Cross-shareholding allows everyone to do their own thing and make money together.

"So, is the next step the share reform of Flash Technology? You need to let the district know about this. I'll cooperate as much as I can. My main task during this period is to cooperate with you."

"Okay, I was originally planning to report to the district after I got here. I've already made an appointment with the leaders."

Listing on the A-share market, even through a backdoor listing, involves numerous regulations, unlike on NASDAQ. For example, the requirement of 25% of the shares in circulation must be met, and an employee stock ownership plan must also be implemented.

Flashpoint Technology's shareholders are currently very simple. In addition to three shareholders each holding 5% of the shares, the parent company, Flashpoint Group, holds 85% of Flashpoint Technology's shares.

Whether these three are willing to cash out before the IPO is unknown, but if the parent company is unwilling to cash out before the IPO, given that 25% of the shares are in circulation, the parent company would have to give up 25% of its shares to raise funds.

This 25% stake, which is also the source of funds for FlashTech's latest financing, will theoretically have little to do with the stock price increase after listing within two or three years for Tan Jincheng and FlashTech Group.

Aside from the fact that a higher market capitalization makes it easier to pledge shares for financing, they cannot reduce their holdings in the short term.

Xie Junhong thought for a moment and then asked, "How much money can the company and you raise right now?"

For both parties to cooperate, funding is key. We need to determine how much money we can raise this time. Even though such a large project requires all sorts of connections, in the end, it still comes down to money.

"This acquisition is centered around ByteDance's advertising platform, which currently has about 6 million yuan in cash. In addition, if Orange Technology goes public, I plan to pledge some of my shares to raise more money. In total, it should be around 10 billion yuan."

There's no point in hiding this. If you really want to find out, Beicang City Investment is easy to find out. Don't be fooled by Xie Junhong's pleasant relationship with Tan Jincheng; his status is by no means low, and his influence in Beicang is definitely stronger than that of Boss Tan.

"Damn, you're already this rich? How much did you make during last year's stock market bull run?"

I remember there was a rumor in the district back then that Tan Jincheng was good at everything except stock trading. I never expected that ByteDance, which focuses on investment, would have 6 million yuan in cash in just a few years.

That's cash! Plus the pledge of Orange Technology's shares, with a market estimate of 28 billion, 4 million is far too conservative.

This money all came from the stock market, and this person doesn't even know how to trade stocks.
Tan Jincheng said with no small amount of smugness, "Haha, if I were a little more ambitious, I could acquire a controlling stake in a company without even needing a bank loan."

It's important to know that this is only the funds from the equity pledges of ByteDance's ByteDance Engine and Orange Technology; he hasn't touched the funds from Flash Group yet.

Xie Junhong didn't want to chat with him anymore: "Great, notify General Manager Jin of Boneng and General Manager Wang of Bafang to come to the meeting. I'll go arrange the fund matters first. You go to the district and settle the share reform matter first."

"OK, no problem."

Boss Xiao Tan readily agreed and immediately dialed the numbers of Jin Chuanling and Wang Qinghua. As soon as the two heard that FlashTech was going to implement a shareholding reform, they immediately understood the reason.

"Is Mr. Tan planning to take FlashTech public? Haha, congratulations! This is one good thing after another."

(End of this chapter)