Source: Visual China
Reporter丨Chen Jing
The sensational Everbright Securities MPS incident has the latest developments.
On June 11, Everbright Securities issued an announcement to disclose the MPS matters and follow-up situation of the wholly-owned subsidiary Everbright Capital.
The announcement shows that JINXINNC. (Cayman Baptist), the subject of overseas project transactions of Shanghai Baptist Fund, filed fraudulent false statements and breach of tax commitments with individuals and institutions such as RICCARDO SILVA ANDREA RADRZZANI, the original seller shareholder of MPS, in the High Court of England and Wales. The litigation claims that the amount involved is approximately US$661 million (approximately RMB 4.2 billion).
Everbright Securities said that the company’s business operations are currently normal.
Originating from MPS, China Merchants Bank and Huarui Bank invested 3.2 billion in total
What is the MPS project? How did Everbright Securities step on the thunder?
The matter dates back to four years ago. This series of disputes are all related to the “Storm” of the British sports copyright company MP&Silva (the “MPS” project) acquired by Baptist Fund, the executive partner of Everbright Baptist in 2016.
Everbright Baptist, a subsidiary of Everbright Capital, serves as the executive partner of Baptist Fund.
In 2016, Everbright Baptist and Baofeng Investment and Shanghai Qunchang launched the Baptist Fund with a fund size of 10 billion and a total maturity of 5 years. According to Tianyan Check, Baptist Fund has a total of 14 investors, of which China Merchants Wealth holds 53.82%, and Everbright Capital holds 1.15%. The executive partners of Baptist Fund are Shanghai Qunchang Financial Services Co., Ltd. and Everbright Baptist Hui, Baofeng (Tianjin) Investment Management Co., Ltd. Huarui Bank and Shenzhen Hengxiang are also partners of Baptist Fund.
In May 2016, Baptist Fund raised 5.2 billion yuan to complete the acquisition of 65% of MPS. MPS used to be the world’s top sports media company, with business covering more than 200 countries and regions around the world, with more than 90 global event property rights, and more than 30 event rights agency partners. LeTV Sports is its largest partner in China. Against LeEco, the Storm Group at the time also aimed at the sports sector, hoping to formally enter the sports industry.
Among the 5.2 billion yuan raised by the Baptist Fund, Everbright Capital contributed 60 million yuan as an inferior investor. The priority investor China Merchants Bank invested 2.8 billion yuan, and Huarui Bank invested 400 million yuan through Aijian Trust; other investors included Zhaoyuan Yongjin invested 600 million yuan, Shenzhen Hengxiang, Baofeng Department and Everbright Capital jointly invested billions .
In October 2017, MPS lost to rival IMG in the Serie A international copyright bid. In the same year, BeIN Sports took away the Ligue 1 copyright from MPS. Since then, MPS has been losing ground in the sports copyright market. Due to the inability to pay copyright fees, some major copyright owners terminated their contracts with MPS early and even took them to court. In October 2018, with the bankruptcy and liquidation order of the High Court of the United Kingdom, MPS became history. The 5.2 billion yuan investment was “flooded” and the investors encountered Waterloo.
Since then, many partners of the Baptist Fund have demanded compensation from the Everbright Department and the Baofeng Department.
In July 2019, Feng Xin, the actual controller of Baofeng Group, was arrested. Baofeng was in deep crisis and could not protect itself. Everbright Capital has become the main claim target of all investors. Everbright Securities’ 2018 annual report shows that the stakeholders of the Baptist Fund’s priority limited partners have presented a letter of replenishment stamped by Everbright Capital, promising that if the priority limited partners cannot exit, they will be funded by the inferior ones. People Everbright Capital assumes the corresponding obligation to make up the difference.
Everbright Capital was sued or arbitrated by China Merchants Bank, Zhaoyuan Yongjin and Huarui Bank, and Shenzhen Hengxiang, and the amount of “debt collection” involved exceeded 4.1 billion yuan. Among them, the amount involved in China Merchants Bank’s lawsuit against Everbright Capital is approximately 3.489 billion yuan, and the amount involved in arbitration applications for Huarui Bank and Shenzhen Hengxiang is 452 million yuan and 168 million yuan respectively. The arbitration initiated by Zhaoyuan Yongjin involved an amount of 100,000 yuan.
On May 31, 2019, Everbright Securities disclosed that the case was at the stage of filing and acceptance, and the impact on Everbright Capital could not be accurately estimated for the time being.
After the MPS incident, Everbright Securities also experienced a series of executive changes.
In April 2019, Xue Feng resigned as chairman and director of Everbright Securities, and Party Secretary Yan Jun replaced Xue Feng as chairman of the company. In January 2020, Liu Qiuming, the original chairman of CM Investment, was newly appointed as the president of Everbright Securities. The former president Zhou Jiannan resigned due to personal reasons. Several senior executives, including the chief risk officer, compliance director, business director and directors of Everbright Securities, have also changed.
Everbright Securities is also constantly trying to hold Storm Group responsible. In April 2020, Everbright Securities disclosed the result of the first instance of the MPS case. The Shanghai Financial Court ruled that Everbright Capital, a wholly-owned subsidiary of Everbright Securities, should pay approximately 3.116 billion yuan to China Merchants Bank and interest from May 6, 2019 to the date of actual settlement. Loss, and bear part of the litigation fees, property preservation fees and other expenses; pay the investment principal of 400 million yuan to Huarui Bank, pay the investment income from January 1, 2018 to the date of actual performance, and bear litigation fees, preservation fees, etc. Currently, Everbright Capital has filed an appeal, and the relevant litigation is still in the process of performing judicial procedures.
MPS risks are fully accrued, and China Everbright is stepping out of the haze
Following a sharp rebound in performance in 2019, Everbright Securities has achieved a three-fold increase in net profit in 2020.
According to the company’s annual performance report released on March 25, the company achieved a total of 15.866 billion yuan in operating income in 2020, an increase of 58% year-on-year, and a net profit of 2.334 billion yuan attributable to the parent, an increase of 311% year-on-year.
However, dragged down by the MPS incident, Everbright Capital has suffered three consecutive years of performance losses in 2020, with losses of 1.634 billion yuan and 2.909 billion yuan in 2018 and 2019, respectively. As of December 31, 2020, Everbright Capital had total assets of 2.980 billion yuan, net assets of 2.442 billion yuan, and losses of 2.069 billion yuan.
Everbright Securities accrued a liability of 1.55 billion yuan for MPS matters in 2020. In the past two years, it has accrued liabilities of 3.011 billion yuan. Up to now, Everbright Securities has accrued liabilities of 4.565 billion yuan for MPS. In the MPS incident, the largest amount of funds contributed by the stakeholders of the two priority partners-China Merchants Bank and Huarui Bank. According to the announcement on the judgment of the first instance disclosed by Everbright Securities, in addition to the priority principal, a certain amount of interest must be paid. However, as far as the current situation of Everbright Securities’ accrued accrual is concerned, Everbright Securities has made a full accrual for this matter.
Everbright Securities stated that since the occurrence of the MPS incident, the company has deeply analyzed the problems reflected in the risk event, focusing on comprehensively recreating the style from improving the risk management system, achieving full coverage of risk management, implementing the responsibilities of relevant personnel at all levels, strengthening professional management and expert decision-making, etc. Control compliance system. The company has carried out a series of risk investigations and rectifications, comprehensively strengthened the management and control of subsidiaries, further built a sound and prudent risk culture, improved the risk compliance system, and improved risk prevention and resolution capabilities. Judging from the 2020 annual results announcement disclosed by Everbright Securities, the company has stepped out of the haze of MPS risk events, the risks have been basically cleared, and the company’s development will become more healthy.
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