Xiwang Group Responds to Equity Auction: Market Rumors Are False, No State-Owned or Strategic Investors in Contact

Source: Taishan Finance

Taishan Finance Reporter Lin Junjie

As the former “first stock of Chinese corn oil,” Xiwang Food (000639.SZ) is at a critical juncture regarding the change of its controlling shareholder. The 18.53% stake held by the controlling shareholder, Xiwang Group, is set to be judicially auctioned on JD.com on March 30. If the auction is successful, Xiwang Food will see a change in its actual controller.

In response to rumors that Xiwang Food will be taken over by state-owned assets, Xiwang Group clearly stated to Taishan Finance that currently there are no state-owned assets involved, nor are there any strategic investors in contact or negotiations regarding the transfer of controlling equity. The related online rumors are all unfounded information.

According to a previous announcement by Xiwang Food, the shares to be auctioned are part of the 200 million shares held by Xiwang Group, accounting for 99.01% of its total holdings and 18.53% of the company’s total share capital. The auction is executed by the Jinan Intermediate People’s Court in Shandong Province.

This auction stems from a collateral dispute between Xiwang Group and the Binzhou Key Enterprise Development Fund Partnership (Limited Partnership). In 2019, Xiwang Group had pledged its shares in Xiwang Food to obtain financing of 2.072 billion yuan, which was originally set to mature on August 30, 2022. If this auction is successful, the combined shareholding ratio of Xiwang Group and its concerted actors will plummet to 1.87%, resulting in a change of the company’s controlling shareholder.

Market analyst Sun Zhaoliang also indicated that the auction setup indirectly confirms the current lack of major capital parties willing to take over. The shares being auctioned have been split into multiple lots, with the core lot being 5 million shares each, and the individual lot transaction amounts are not high. This setup is mainly for facilitating the completion of the auction and is not a conventional method of changing the actual controller, contrary to the market’s previous speculation about “changing the actual controller.”

Additionally, bidders will face investment lock-up period restrictions. According to the auction requirements published on JD.com, bidders must comply with the “Interim Measures for the Administration of Shareholding Reduction by Shareholders of Listed Companies” and other related rules, and after a successful bid, they must wait at least 6 months before selling their shares for cash. Coupled with the company’s imminent annual report disclosure timeline, the investment risk of this equity auction has significantly increased.

Sun Zhaoliang emphasized that more critically, this equity auction not only concerns the ownership of control but also involves the company’s long-standing market “minefield”—the compliance issue of 1.5 billion yuan in financial company deposits, which may be completely triggered by the change of control.

According to the relevant provisions of the “Administrative Measures for Financial Companies of Enterprise Groups,” if the auction is successful on March 30, Xiwang Food’s controlling shareholder will no longer be a holding enterprise of Xiwang Group, and at that time, Xiwang Food will lose its qualification as a member unit of Xiwang Group’s financial company. Once the company loses this qualification, the 1.5 billion yuan deposit in Xiwang Financial Company will lose compliance, and withdrawal will need to be completed, leading to withdrawal risks.

Market participants remind that currently, there is no clear buyer for the equity auction of Xiwang Food, and there are many uncertainties and risks ahead. Investors should remain rational, be vigilant about related investment risks, and avoid blindly following market speculation. Xiwang Food also stated that it will closely monitor the subsequent developments of this auction matter and fulfill its information disclosure obligations in a timely manner according to laws and regulations.

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