The former CFO of Babytree attacked the "Fosun System", and the company's market value of 400 million yuan was suspended for 7 months

After 8 months, the CFO of Babytree's "dismissal" once again "challenged" Fosun.

Author | Gao Yuanshan, Su Ying, Zhang Kaijing

Editor丨Gao Yan

Source | Bronco Finance

In April this year, Babytree Group (1761. HK) former CFO Xu Chong is on fire. The story of breaking into the office with a long sword after being dismissed has been widely circulated, and it has been jokingly called a "martial arts business war" by netizens, and Xu Chong also reported Babytree after being dismissed, and a number of listed companies under the controlling shareholder "Fosun System" behind him were suspected of false listing, which became the focus of attention in the industry for a while.

However, Fosun said that they did not see any substantive evidence for the revelations, and Babytree also announced that it was operating normally a week after the outbreak of "infighting". thought that the incident had come to an end temporarily, but Xu Chong made waves again on December 22. It issued a "solemn statement", saying that what has happened in the past eight months is jaw-dropping, "Fosun Group has carried out a series of very dark operations for the purpose of retaliation, covering up its serious violations of laws and regulations, and denying that the company owes a large amount of debt to me personally."

Judging from the Weibo information, this is an account with only 55 followers, just joined Weibo on December 19, and @ a group of public security and judicial institutions at the same time as the statement. And Xu Chong himself also confirmed the existence of the statement. It seems that Xu Chong is menacing this time.

Source: Xu Chong's Weibo

In this regard, on December 23, Babytree responded on the official Weibo account, saying that Xu fabricated and spread a large amount of false information, which was "dissatisfied with the company's previous dismissal of him, so he spread rumors to vent his personal anger." "The company will resolutely safeguard its legitimate rights and interests through legal channels.

The relevant person from Fosun said that the official response of Babytree shall prevail.

Source: Babytree Weibo

It is worth mentioning that Babytree has been suspended since May 2, and the company's 2022 annual report and 2023 interim report have also been difficult to give birth to so far. The trigger for all this, the company's statement in May, was related to the fact that Baker Tilly Hong Kong Accounting noticed "recent media rumors" and asked the company to provide information in response to its inquiry.

Source: Babytree announcement

In 2018, the IPO valuation was 11.3 billion yuan, and the company's multiple rounds of financing totaled 7.5 billion yuan, and now the company's market value is 440 million Hong Kong dollars (contract 402 million yuan). The company's share price also plummeted from HK$8 per share in March 2019 to HK$0.265 per share before the suspension, a drop of more than 96%.

Breaking in with a long sword VS illegal detention for 3 days?

At the beginning of the statement, Xu Chong first emphasized that he had foreseen the result of being recalled, and said that he was "the person who paid the most for Babytree, there is no one", and had helped the company raise a total of 7 billion yuan in the capital market over the years, and "extended its life" many times; every year, he had to find ways to deal with many compliance risks caused by Fosun and Babytree Chairman Wang Huainan, and even paid to buy himself into the fifth largest shareholder.

After talking about "paying", Xu Chong began his new "accusation" against Fosun.

First of all, Xu Chong claimed that Fosun Group had illegally restricted the personal freedom of himself and his team, and carried out physical threats and false accusations.

From Xu Chong's perspective, he was not a "barbarian" who forcibly broke into the office with a long sword in his hand, locked himself in it for three days, and refused to hand over to the new CFO, but was a "victim" who was blocked by more than a dozen "men in black", the power supply of the office was also cut off, and he was detained for three days and three nights. It was not until the fourth call to the police three days later that he was able to leave the office.

Previously, someone broke the news on social platforms that Xu Chong refused to hand over and locked himself in the office for 3 days

Xu Chong said that even when he arrived at the police station, "there were people in black guarding the door." Whether it was going to the toilet or answering the phone, several Fosun personnel followed closely. ”

Since then, the matter of Xu Chong and Babytree has been identified as an economic dispute over creditor's rights and debts, and is not under the jurisdiction of the public security organs.

Immediately afterwards, Xu Chong began to claim the arrears and negotiate with Chen Xiaobin, a representative of Fosun. However, he said that Chen Xiaobin had picked out someone to find a relationship, and Xu Chong would "never recover".

Chen Xiaobin also asked in front of Xu Chong and his lawyer Li Bin whether he was willing to "break the bank and avoid disasters" "as the time window for arrest is approaching". In addition, during the negotiations, Xu Chong said that he had received more than one call from a so-called "judicial broker", to the effect that Fosun had taken care of everything, what do you do to fight them, and quickly find us to solve it......

Xu Chong also said: "Fosun found someone to invalidate my exit document, which made it impossible for me to return to Hong Kong, which caused a significant loss to my fund business in Hong Kong as a managing partner. ”

Finally, Xu Chong said that from September 2018 to the time of his ouster this year, the balance of funds owed to him by the company was 210 million, and the account information, fund path, and bank documents of each loan and repayment were very clear.

However, all these accusations are rumors in the eyes of Babytree, and they are acts of "venting personal anger".

At present, the two sides insist on their own opinions, and the full truth of the incident needs to be further disclosed before the public security and judicial organs make a report.

The controversy over the "IPO structure order" is still to be continued?

Xu Chong, 48, graduated from Nanjing University with a bachelor's degree and a master's degree from Chinese People's University, both with law degrees. Before joining Babytree, he served as the CFO of several companies. He also has a CFO resume of nearly ten years in Babytree.

In this context, Xu Chong's shot in April this year attracted great attention from the media. According to the self-media "Financial Polar Eye", Xu Chong broke the news that in order to successfully land on the main board of the Hong Kong Stock Exchange in 2018, Chen Qiyu and Wang Changying, non-executive directors appointed by Fosun, and Wang Huainan, executive director and chairman of the company, decided to adopt a "structure sheet" Expansion of IPO issuance: The Company agreed with an investment institution named AMTD Global Markets Limited (AMTD) to subscribe for the Company's listing order for US$70 million, and promised to "return" all the funds raised by the Company to AMTD in the form of entrusted wealth management on the day of listing and issuance.

In order to ensure the success of the IPO, Babytree's directors, Chen Qiyu and Wang Huainan, who were the representatives of the major shareholders at the time, accepted a similar structure of about US$30 million from the "China Science and Technology Innovation Department", after which Zhang Tao, the founder of the "China Science and Technology Innovation Department", was arrested by the judicial authorities. In order to "fill in" this matter and cover up the fact of the "structure sheet", the two approached Xu Chong for help, hoping to "contribute to fill the pit" in the name of personal loans, so Babytree Group still owes Xu Chong about 130 million yuan.

In addition, Xu Chong questioned that Henlius (2696. HK), it is very likely that the $117 million entrusted financial management thunderstorm needs to be impaired, and the real reason may be related to the "IPO structure sheet", and the counterparty of Henlius in this incident is also AMTD. The "entrusted wealth management" funds may never be under the control of the listed company, and whether it can be "redeemed" needs to wait for AMTD to cash out the IPO subscription order in the market, but at present, the price of Henlius is much lower than the IPO issue price, and it is difficult to realize the shares held by AMTD, and the listed company can only "fill the hole" for financial impairment.

Xu Chong believes that Fosun Tourism, Henlius and Babytree Group have all used the "structure sheet" to falsely expand the scale of IPO issuance, which is suspected of constituting a false listing. He also said that there is sufficient and conclusive evidence and hopes to attract the attention of the Hong Kong Securities and Futures Commission, the Stock Exchange and other institutions.

He pointed out that the IPO structure alone will lead to the actual available funds of listed companies being much lower than the books, and this phenomenon needs to be paid attention to by market investors to avoid causing wrong value judgments and bringing investment losses.

One stone stirs up a thousand waves. According to incomplete statistics, from 2015 to 2021 alone, there were more than 60 IPO issuance projects completed by AMTD Group (including AMTD International), which is behind AMTD. Among them is the Xiaomi Group (1810. HK), Meitu (1357. HK) and many other well-known enterprises. If AMTD Group is really as Xu Chong said, the scope of the "saucy operation" that will help expand the scale of the IPO can be imagined.

In response to Xu Chong's real-name revelations, Fosun Group did not give an official response. However, people from the "Fosun system" complained that they did not see any substantive evidence for the revelations, and if the problem was really discovered, the supervision of Hong Kong stock securities was quite strict, and they could directly report to the regulator without breaking the news to the media.

It is worth noting that in August this year, Babytree issued an announcement in response to the false listing.

Source: Babytree announcement

Babytree said that the company's investigation did not confirm that the board of directors reached a specific arrangement with AMTD Global and any "Zhongke Innovation" entity to expand the scale of the listing and issuance in the so-called "structure sheet" at that time.

Previously, Xu Chong had said that Babytree owed him 130 million yuan, which was also vetoed by Babytree. However, in this statement, the amount owed has been increased to 210 million yuan.

In short, Babytree's announcement basically completely repudiated Xu Chong's accusations. However, the Company did investigate some new circumstances, firstly, that "members of the Group had entered into fund contracts or entrusted investment agreements with certain suspected entities of the China Science and Technology Innovation Department", but none of these "entities" had any transactions with the Company in the name of "China Science and Technology Innovation Department", and second, there were preliminary indications that certain former employees of the Group may have been involved in irregular financial operations, misappropriation of funds and/or misappropriation of funds. However, further investigation is needed.

Who is to blame for the fall of the 10 billion baby tree?

Regarding the fact that Baby Tree, which was once valued at 10 billion yuan, fell to a market value of less than 500 million yuan, some company people posted Xu Chong's reflection on social media. The article was published by Xu Chong in the company group through his assistant on March 21, but the day after it was published, Xu Chong's assistant was dismissed.

According to the article, (Babytree) Group has entered the "era of Fosun Group's entrusted management" since 2017 and 2018, with an average annual loss of 460 million yuan and a cumulative loss of nearly 2 billion. According to the clear instructions we have received from Fosun's senior management and delegated personnel, we are "burning out the future".

But whether this "future" can be "burned", Xu Chong made a reflection, and pointed out that the baby tree today is related to the incompetence of the management appointed by the "Fosun System".

In 2022, Babytree's revenue increased by 11.6% compared to 2021, and gross profit decreased by 21%. The gross profit margin fell sharply from 61% to 43%, and the consolidated loss deteriorated further to 468 million yuan from 387 million yuan in 2021.

Among them, objective external reasons such as the epidemic have led to a decline in performance, but Xu Chong also said at the same time that the company's management is looking for objective reasons every year, but in recent years, on the same track, too many companies have been successful.

Xu Chong believes that for four years, Fosun's existing appointed team has been in place for more than a year and a half, and has been focusing on the matter of "C2M-oriented product sales". However, hundreds of products floated by, billions of dollars of expenses passed, and the final summary of the law is that the budget and ambition are as high as tens of millions or even billions, the actual sales are tens of thousands and 100,000, and the group's capital consumption is millions and tens of millions.

During this period, he and the financial capital team gave several warnings to the management, but the management did not take them, and the group fell into a cycle of losses.

In addition, he also pointed out that in the "Fosun system", dozens of people are dispatched in rotation in Babytree, such as those who have been released from prison for economic crimes, those who have been limited to debt disputes, and those who serve as the general manager of the line but were found to have committed corruption crimes against Babytree Group in the first order, and some of them have done dirty things when they come to Babytree, which also led to Alibaba Group's angry withdrawal from the board of directors of Babytree.

However, although Xu Chong believes that the fall of Babytree is not unrelated to the dereliction of duty of the management appointed by the shareholder "Fosun", judging from his dismissal as executive director and the removal of CFO, "Fosun" should also be dissatisfied with the previous management, including the CFO.

An interesting detail is that it is said that Xu Chong, the whistleblower, individual shareholder and CFO, has taken the company as his home and lived in the office for a long time, but there are two theories about why he lives in the office, one is because he has a Xi of working overtime, which is convenient for work; the other is that he speculates in US stocks and can sleep more the next day in the company.

For the same thing, different people may see completely different perspectives because of their own preferences and experiences.

Have you ever used the Baby Tree?What do you think about the latest progress of the Baby Tree infighting?Welcome to talk in the comment area.