Source: 36氪 Author: Yuan Silai
html On July 28, Baofeng issued an announcement stating that the actual controller of the company, Feng Xin, had been taken compulsory measures by the public security organs on suspicion of committing a crime. Related matters are yet to be further investigated by the public security organs. According to China Business News, Feng Xin was arrested mainly related to an acquisition case jointly initiated by Storm Group and Everbright Capital in 2016. At that time, they played a small and powerful trick - Baofeng offered 200 million yuan, Everbright invested 60 million yuan, and leveraged other investors to raise 5 billion yuan to acquire the majority of the British sports copyright company MPSilva Holdings S.A (hereinafter referred to as MPS) equity. According to China Business News cited sources, Feng Xin engaged in bribery during the financing process of this project.At the same time, according to China Business News, there are 8 people involved in the control measures taken by relevant authorities. These 8 people include both internal staff and former staff of Baofeng Group, as well as those in MPS. Outsiders of the company who worked for Feng Xin during the merger and acquisition process include Bi Shijun, the former secretary to the board of directors and CFO of Baofeng Group.
Baofeng responded to 36 Krypton: "Everything is subject to the company's announcement. At present, the company's operating conditions are normal. The company's management will strengthen management to ensure the company's stability and normal business operations. At the same time, the company is actively cooperating with relevant department investigations. There is news Announced as soon as possible." No matter how
said it was still "stable" internally, this earth-shattering mine still caused thousands of waves.
Leverage game
Time goes back to 3 years ago. Baofeng and Everbright Jinhui jointly established Jinxin Fund, raised approximately 5.5 billion, and acquired 65% of the shares of European copyright agency MPSilva. At that time, the company’s valuation had exceeded $1 billion. Everbright and Baofeng accounted for a small proportion of the fund. LP Investment Fortune, the main investor, invested 2.8 billion, Baofeng Technology only accounted for 200 million, and Everbright Capital and Everbright Jinhui directly and indirectly invested 71.75 million yuan.
The important reason why everyone dares to participate in this bet is that there is a listed company to back it up. Jinxin and Baofeng agreed that Baofeng’s listed company will “take over” MPS within a year and a half, and Jinxin Fund will complete its exit, and everyone will make money. , guests enjoy themselves. According to the civil judgment between Shanghai Junfu Investment Management Co., Ltd. and Sichuan Trust Co., Ltd. , intermediate investors of Jinxin Fund can obtain an expected fixed investment income of 15% of the investment amount every year - such a return can be said to be quite Tempting.
However, Feng Xin did not fulfill this obligation, which led to priority partners such as China Merchants Wealth, as creditors, to give priority to recovering their investments. As one of the inferior partners who increased leverage, Everbright signed a "make up the difference" debt cover agreement and had to repay debts that were far greater than its own investment.
As a result, Everbright Securities disclosed its annual report on March 28 and announced that its net profit fell sharply by 96.6% in 2018. This was mainly caused by Jinxin Fund, which caused Everbright to accrue a loss of 1.5 billion yuan in one fell swoop.
But Baofeng and Feng Xin are the biggest persons responsible for this huge debt. As a general partner, Feng Xin's subsidiary Baofeng Investment has unlimited joint and several liability. Everbright said that the reason why it took full debt cover was based on Baofeng Group's commitment to repurchase MPS equity, but Baofeng Group and Feng Xin did not. “Ebright has also been dragged into the water.” A person familiar with the matter told 36Kr.
Both Baofeng Group and Feng Xin were unable to repay their debts. In April, Baofeng issued a miserable 2018 annual report, which saw an annual profit of more than 50 million yuan in the previous two years turn into a loss of 1.09 billion yuan. Among them, asset impairment losses were 768 million yuan. The market value of Baofeng Group has dropped by more than 90% compared to its high point. Currently, it is only about 3.5 billion yuan. Feng Xin's listed company shares have all been pledged or frozen. Jinxin Fund has currently exposed investments of 3.5 billion yuan from priority creditors.
html On May 8, Everbright announced that its subsidiaries Everbright Jinhui and Shanghai Jinxin sued Baofeng Group for a compensation of 750 million yuan.This is the largest and most fatal debt of all Storm. "MPS is a bomb. If it blows up (the storm), it will be gone." The above-mentioned person familiar with the situation told 36Kr.
An acquisition full of loopholes
From the beginning, this was an acquisition that was not promising. “At that time, finance and investment strongly opposed this matter, but it was done anyway."An insider told 36Kr.
In fact, before the acquisition, many people in the management expressed doubts. According to one participant's recollection, "Some people thought that the amount was too high and they could not afford to lose." Some even thought that the amount was too high and they could not afford to lose. Executives "firmly opposed" because MPS is an asset-light company and its core assets are people. Once key people with connections in the sports circle leave, "there will be no copyrights if there are no more people." A person with zero experience and zero connections in the international sports world Baofeng was unable to respond.
Feng Xin did not listen to the advice and still pushed forward the acquisition.
Later events proved that their prediction was correct, but in fact, most of MPS's copyrights were obtained through personal relationships. , and most of them will expire around 2018. MPS cannot purchase new copyrights - the sports copyright circle is a closed circle where "face recognition" is very important, and a group of Chinese people who are unfamiliar with the place have no way to do it. Breaking into the inside. What's more, big companies are not merciful: IMG spent 371 million pounds to win the global broadcast rights of Serie A from 2018 to 2021, and MPS was not even qualified to enter.
Moreover, the two founders. After the players cashed out, they left a mess: In August 2018, Serie A took MPS to court because they failed to pay US$44.4 million in copyright fees. In addition, they owed the Bundesliga US$10 million and the French Open 5 million pounds. MPS frequently failed in international copyright competitions and became insolvent. It was declared bankrupt by the British High Court in October last year and 5 billion yuan was wiped out. Looking back, the most critical aspect of this incredible acquisition was due diligence. , but in this acquisition case, it can be said that it was completely inadequate. Although CICC, a well-known American law firm and one of the Big Four were involved, according to "Asia Alternative Investment", MPS's cash. There is "whitewashing" in both the flow and the business. Some people in the industry described this as almost a "primary school student level" case in the history of Chinese capital cross-border investment.
The two parties did not even sign a very basic non-compete agreement. The founder Andre. Radrizzani and Riccardo Silva are still making waves in the sports world, and Radrizzani is adding fuel to the fire: his new company Eleven Sports paid IMG a fee after it secured the Serie A broadcast rights , won the broadcast rights of Serie A in the United Kingdom and Ireland.
According to the announcement, the equity impairment amount of Baofeng in this transaction was 140 million, and there was a bad debt loss of 48 million. Moreover, Feng Xin had already transferred his 18 million. Tens of thousands of shares of Baofeng Group were pledged to China Merchants Asset Management, the preferred partner of Jinxin Fund, and the equity of
MPS disappeared before it was warmed up. The entanglement between Baofeng and Everbright is far from over. Status
Feng Xin is keen on capital games.
Baofeng has been on the market for four years and has proposed three private placement financing plans, but none of them were approved. Frequent failures in additional issuances forced Baofeng to invest in industrial funds.
Starting from the end of 2015, in just half a year, Baofeng participated in several industry funds. Among them are "debt" funds similar to Jinxin Fund and "small and broad" funds. These funds provide "blood" for Baofeng's new business. For example, Gopher Asset Management established a 500 million yuan fund "Baofeng Xinyuan" and participated in the Series B investment of Baofeng Mojing . It also has similar risks, such as Feng Xin provided a minimum return guarantee (annualized return of 11%) for the 684 million yuan Shanghai Junsheng M&A Fund as a whole.
36 Krypton compiled according to the Baofeng announcement
An insider told 36 Krypton that the amount of funds raised by Baofeng through various funds is around 8 billion.
equity pledge is Feng Xin's most important back-up capital and an important source of funds for Baofeng - Feng Xin pledged 29 times in four years, eventually reaching more than 95% of the shares held. It is difficult for 36Kr to verify the actual whereabouts of all the funds obtained from Feng Xin’s equity pledge, but according to Feng Xin, the funds from equity pledges are mostly used for Baofeng’s new business development.
can confirm that the financial issues involved by Feng Xin are complicated. In four years, the storm has gone from heaven to hell. Against the background of the booming A-share bull market, Baofeng's market value surged tenfold within two months of its listing, and 10 billionaires, 31 multi-millionaires and 66 millionaires were born overnight.After
thought he had the nuclear weapon of listing. Baofeng plans to quickly build a "DT Entertainment" by investing heavily in purchasing a film and television company, a game company and a game publishing company. That was later Scarecrow Pictures, Lidong Technology and Gamp Technology. Unfortunately, this acquisition was rejected without much suspense when the China Securities Regulatory Commission came to the point of "shifting away from reality and focusing on fiction".
missed the film and television boom, but Baofeng fell in love with sports again. It entered the game when the sports copyright war was in full swing: LeTV Sports announced that it had spent hundreds of millions of dollars to acquire the exclusive broadcast rights of the Premier League in Hong Kong. Suning ’s PPTV was not to be outdone and spent 250 million euros to sign the exclusive full media rights of La Liga. Baofeng also wanted to get involved, but ended up buying a time bomb.
VR is a direction that Feng Xin is optimistic about. Of course, the big reason is still the enthusiasm brought by the Oculus acquisition. However, the VR industry began to cool down in 2016, and Baofeng Magic Mirror once again became a "martyr", which also caused a major asset impairment of 104 million for Baofeng Group's listed company, which holds close to 20% of the shares.
Baofeng’s only chance for a comeback is Baofeng TV, its Internet TV business. Feng Xin reflected last year that he should have focused his energy on TV as early as possible.
However, Baofeng adopts LeTV's strategy of losing money and making money. According to Baofeng, the TV business's losses exceeded 300 million in 2016 and 2017, and the losses in the first five months of 2018 also reached 120 million.
This also makes TV financing difficult. According to the recollections of resigned employees, well-known FAs on the market at that time including Huaxing, Hanergy, etc. had done this case, "but they could not sell it." In the end, relying on Liu Yaoping 's own connections, industrial investors came to the rescue. Currently, Baofeng TV is still financing, but the progress is not smooth.
Baofeng follows the trend every time, but chooses the wrong outlet. The "demon stock" that once attracted much attention is now riddled with holes. In 2018, the owner's equity was only 21 million yuan. With Feng Xin suspected of committing a crime, this former A-share star company will not have a bright ending. Of course, it is still the majority of investors who ultimately foot the bill.
Source: 36氪 Author: Yuan Silai
