Shenhua Coal Puts 10pc of Company Assets in a WMP Without Approval

Shenhua Energy (1088 and 601088) decided to put 10 percent of company assets in a WMP without any board approval, in what the Chinese media used the colorful wartime idiom "decapitate first, report later."

According to the announcement, China Shenhua at the end of December three times to buy two "guaranteed floating income" financial products, the total contract amount of not more than 33 billion yuan, has been paid 31 billion yuan.

China Shenhua entrusted the cumulative amount of wealth has more than 10% of net assets of shareholders, the need to submit to the Board of Directors for consideration. However, prior to the December 28 deal, China Shenhua did not convene a board meeting to consider the transaction. But in January 3, 2017 in writing to form a resolution to consider the relevant transaction approval and ratification.

Short-term large sums of money signed for the purchase of financial products for what is the consideration? Why is there a "cut after the first" situation in the proceedings? Daily Economic News (micro-signal: nbdnews) Reporters on the morning of January 6, Shenhua Group propaganda department call the parties concerned, said the other party is discussing issues related to follow-up will be a formal response.

...Products are guaranteed floating income type, the term of 90 days, the annualized rate of return of 3.3%.

...It is noteworthy that, according to the Shanghai Stock Exchange Listing Rules and its Articles of Association, for 12 consecutive months, the amount of entrusted financial transactions accumulated to reach the last audited net assets attributable to shareholders of the Company more than 10% should be submitted to the Board of Directors for consideration and timely disclosure.

According to China Shenhua's 2016 third quarterly report, the net assets attributable to its shareholders during the period were RMB305.789 billion. Although the overall financial data in 2016 has not yet been disclosed, according to China Shenhua said in the announcement, "the Company found that the above shall be calculated, the board meeting to consider the transaction.
The purchase is part of the ongoing liquidity tsunami in China:
According to "China through the camp newspaper," in October 2016 reported that the slow recovery of the real economy and increasing the size of the money supply is creating one "money pool" after another, an increasing number of listed companies who have no choice but to purchasing banks public financial products to achieve hedging or reduce loan spreads to meet future needs.

Among them, those who love to buy financial products often have the characteristics of high capital consumption, and most of the focus on shipping, mining, etc. are generally regarded as areas of excess capacity.

iFeng: 中国最大煤企竟花330亿买理财产品 还“先斩后奏”

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