CEFC China Energy

CEFC China Energy (Chinese: 中国华信能源) was a Chinese conglomerate. The company was among the 10 largest private companies in China in 2014.[4] Since 2013 the company was listed on the Fortune Global 500 list holding the rank of 229 in June 2016.[5][6] In March 2020, the company was declared bankrupt as well as its subsidiaries CEFC Shanghai International and CEFC Hainan International.[1] The company used a complex web of affiliated companies to facilitate fake deals, inflate trade figures and obtain bank loans to fuel its aggressive expansion.[7]

CEFC China Energy
TypePrivate
IndustryOil and gas, Financial services
FateBankrupted[1]
HeadquartersShanghai, China
Area served
Worldwide
Key people
RevenueIncrease CN¥263 billion (2015)[3]
Number of employees
30 000 (2015)[3]
Websitehttp://www.cefc.co

IndustriesEdit

In 2014, the company generated revenue mainly from oil and gas (60%) and financial services (25%),[3] but operates also in a wide range of other sectors like transport infrastructure, forestry, asset management, hotel management, warehousing services, real estate development and logistics services.[2] A large portion of CEFC's assets were concentrated in overseas markets.[2]

Controlling shareholderEdit

The controlling shareholder was Shanghai Energy Fund Investment Ltd (SEFI), which was registered under Ye Jianming, the chairman of CEFC.[2] In January 2017, Czech President Miloš Zeman appointed Ye as his economic adviser.[8]

The South China Morning Post, in a 2017 piece on Ye, repeated rumors that had appeared in Czech news media that Ye is linked to the People's Liberation Army and noted "speculation runs wild".[9][10][11]

In March 2018, Ye was detained for questioning on suspicion of economic crimes.[12][13] South China Morning Post reported that "Shanghai Guosheng Group [zh], a portfolio and investment agency controlled by Shanghai’s municipal government, had taken control of CEFC China Energy".[14][15] The state controlled CITIC Group acquired 49% of CEFC Shanghai, a subsidiary of CEFC China Energy. CEFC Shanghai owned CEFC Europe.[16][15] In April 2018, CEFC announced possible layoffs of 15,000 employees, who had not been paid for two months.[17]

Czech investmentsEdit

In May 2015, the company acquired a 5% stake in J&T Finance Group.[18] This increased to 9.9% in September 2015.[19] In 2017, the company applied to acquire 50% J&T Finance Group, but the deal was refused by Czech National Bank because of lack of sufficient information on the origin of most of the funding for the deal.[20][21]

In September 2015, the company acquired multiple assets in the Czech Republic - a majority stake in brewery Pivovary Lobkowicz Group [cs], a 10% stake in airline Travel Service, 60% in football club SK Slavia Prague and real-estate assets in Prague - the building of the former Živnostenská banka at Na příkopě street and Le Palais Art Hotel Prague.[22][23] CEFC also bought a stake of between 50 and 90 per cent in Czech online travel agent Invia in March 2016, probably with a view to capitalising on the rapidly increasing numbers of Chinese tourists visiting Prague.[24]

After CEFC China Energy invested in Czech media company Empresa Media, the owner of the popular TV Barrandov and magazine Týden, the tone of the group’s coverage of China changed; all neutral and negative reporting about China was replaced by positive reporting.[25]

Failed Rosneft acquisitionEdit

In September 2017, CEFC announced the purchase of a 14.16% stake in Rosneft, Russia's largest oil producer, for about $9 billion.[26][27] However, CEFC was unable complete the acquisition and paid a break fee of about $257 million to the sellers, a consortium of Qatar Investment Authority and Glencore.[28]

2018 defaultEdit

In May 2018, CITIC Group announced they would repay ca 450 million euros owed by CEFC Europe to finance and banking group J&T within days[29] but since the debt was not paid a week later, J&T announced it had taken over shareholder rights and installed crisis management at CEFC Europe.[30] Several days later, CEFC Shanghai defaulted on $327 million in bond payments, and offered to make the payments six months after the maturity date.[31]

In October 2020, some retail CEFC bondholders in Hong Kong filed a complaint to the Securities and Futures Commission in Hong Kong against the bond's sole underwriter CITIC CLSA.[32]

ReferencesEdit

  1. ^ a b "Fallen Energy Conglomerate CEFC Declared Bankrupt - Caixin Global". www.caixinglobal.com. 2020-04-25. Retrieved 2020-05-11.
  2. ^ a b c d Staff Reporter (11 July 2014). "Mysterious Shanghai private firms makes Fortune Global 500". WantChinaTimes. Archived from the original on 15 July 2014. Retrieved 7 September 2015.
  3. ^ a b c "Corporate Profile". CEFC China. Archived from the original on 4 March 2016. Retrieved 27 December 2017.
  4. ^ "Top 10 private companies in China". China Daily. 20 August 2014. Retrieved 7 September 2015.
  5. ^ "2016年财富世界500强最新排行榜名单 财富世界500强中国110家上榜-理财产品 - 南方财富网". www.southmoney.com. Retrieved 2016-07-24.
  6. ^ Fortune Global 500
  7. ^ "Citic Advances Deal to Buy Czech Assets of CEFC - Caixin Global". www.caixinglobal.com. 2019-04-09. Retrieved 2020-05-11.
  8. ^ "China’s CEFC has big ambitions, but little known about ownership, funding". Reuters. 13 January 2017.
  9. ^ "Opaque Chinese oil group makes clear gains in former Soviet bloc". Financial Times. 13 September 2017.
  10. ^ "Who’s that 39-year-old paying HK$1.4 billion for three office floors?". South China Morning Post. 21 February 2017.
  11. ^ Brady, Anne-Marie (May 9, 2019). "On the Correct Use of Terms". Jamestown Foundation. Retrieved 2019-09-30.
  12. ^ "China detains oil entrepreneur, wiping US$153 million off stocks". March 2018.
  13. ^ "China's CEFC chairman investigated for suspected economic crimes: Source". Reuters. March 2018.
  14. ^ "China takes over nation's biggest private oil group in debt crackdown". 2018-03-02.
  15. ^ a b "China's CEFC taken over by Shanghai government agency: SCMP report". Reuters. 2018-03-02.
  16. ^ "CEFC China's chairman to step down; CITIC in talks to buy stake in unit". Reuters. 2018-03-20.
  17. ^ "Down and out: CEFC staff go unpaid as once-high flying company flounders". Reuters. 2018-05-04.
  18. ^ "China's CEFC takes stake in Czech-Slovak J&T Finance Group". Reuters. 14 May 2015. Archived from the original on 19 September 2015. Retrieved 7 September 2015.
  19. ^ Čínský konglomerát CEFC už má v J&T desetinu. Usiluje o 30 procent http://ekonomika.idnes.cz/cinska-cefc-zvysila-podil-v-j-t-na-deset-procent-chce-30-procent-pu0-/ekonomika.aspx?c=A150903_135502_ekonomika_rts, Retrieved 25 March 2016
  20. ^ Muller, Robert (2018-01-04). "China's CEFC hits regulatory hurdle in pursuit of Czech JTFG stake". Reuters. Retrieved 2018-03-09.
  21. ^ Johnstone, Chris. "CEFC faces obstacle to Czech purchase of J&T Financial Group stake | Radio Prague". Retrieved 2018-03-09.
  22. ^ Hovet, Jason (2015-09-05). "China's CEFC adds to Czech buying spree with airline, brewery deals". Reuters. Archived from the original on 2015-09-08. Retrieved 7 September 2015.Johnston, Raymond (4 September 2015). "Chinese firm CEFC buys majority stake in Slavia Praha". Prague Post. Retrieved 7 September 2015.
  23. ^ Annual report of CEFC Investment (Europe) Company a.s. for calendar year 2015
  24. ^ Čínská CEFC kupuje podíl v Invii, chce nabídnout servis čínským turistům, iDnes.cz, http://ekonomika.idnes.cz/cinska-skupina-cefc-ovladne-on-line-obchodnika-se-zajezdy-invii-pvn-/ekonomika.aspx?c=A160322_173841_ekonomika_rts, Retrieved 25 March 2016
  25. ^ Karásková, Ivana. "How China Influences Media in Central and Eastern Europe". thediplomat.com. The Diplomat. Retrieved 21 November 2019.
  26. ^ "Why an Enigmatic Chinese Company Just Spent $9 Billion on a Stake in Rosneft. Bloomberg. 2 October 2017."
  27. ^ "China Deepens Oil Ties With Russia in $9 Billion Rosneft Deal". Bloomberg.com. 2017-09-08. Retrieved 2018-03-09.
  28. ^ "Failed Rosneft Deal Costs CEFC China a Quarter-Billion". Caixin.
  29. ^ "UPDATE 1-China's CITIC to pay CEFC Europe's 450 MLN euro debt - CEFC official". Reuters. 2018-05-09.
  30. ^ "UPDATE 2-J&T Private Investments says takes over shareholder rights in CEFC Europe". Reuters. 2018-05-17.
  31. ^ "UPDATE 1-CEFC Shanghai International defaults on $327 MLN in bond payments". Reuters. 2018-05-21.
  32. ^ "UPDATE 1- CEFC Energy Retail Bondholders File SFC Complaint against Bond Bookrunner CLSA". Debtwire. 2020-12-30.