Shandong Xinchao Energy Corporation (600777.SH): Huaneng Hai Invests billions of dollars in acquisitions but ultimately fails, investor losses raise concerns.

On the evening of August 30, Shandong Xinchao Energy Corporation announced that it had received a "Notification Letter" from Beijing Huinenghaitou New Energy Development Co., Ltd. (referred to as "Huinenghaitou"), and according to Article 83 of the "Regulations on the Management of Acquisition of Listed Companies", due to Huinenghaitou and related shareholders being considered as acting in concert, Huinenghaitou had decided to terminate the planning of the partial tender offer to acquire the company's shares. The announcement revealed that the second largest shareholder of Shandong Xinchao Energy Corporation, Beijing Shengbang Kehua Trading Co., Ltd. (holding 5.51% of shares) borrowed 1.2 billion yuan from a related company of Huinenghaitou. The fourth largest shareholder, Bona Sicheng Mai Investment Fund 1 (holding 4.98% of shares), and the fifth largest shareholder, Fanhaihuixiang Long-term Value Private Equity Fund (holding 4.56% of shares), had their actual contributors borrow 2 billion yuan from a related company of Huinenghaitou. As of now, Huinenghaitou, Beijing Shengbang, Sicheng Mai 1, Fanhaihuixiang, Lu Jianxiong and Li Mingjing (the only two shareholders of Beijing Shengbang) respectively hold 4.99%, 5.51%, 4.98%, 4.56%, 0.008%, and 0.002% of Shandong Xinchao Energy Corporation's shares, totaling 20.054%. On September 2, Shandong Xinchao Energy Corporation resumed trading and immediately hit the limit down, whereas after Huineng Haitou announced the tender offer on August 23, the stock price of Shandong Xinchao Energy Corporation had hit the limit up for three consecutive days. Investors found themselves caught in the mix of ups and downs. Information showed that Huinenghaitou and related shareholders began to enter Shandong Xinchao Energy Corporation in 2023 and by the end of the first quarter, held nearly 20% of the shares. Market observers believe that the reason for concealing the concerted action was to save on acquisition costs, but at the expense of investors' interests. The decision published by the Shandong Securities Regulatory Bureau regarding Beijing Huinenghaitou New Energy Development Co., Ltd. and related entities stated that when Huinenghaitou's cumulative holdings in Shandong Xinchao Energy Corporation reached 5% and for every additional 5%, Huinenghaitou and related entities failed to fulfill their reporting and announcement obligations as required, and were prohibited from buying or selling Shandong Xinchao Energy Corporation's shares. Furthermore, for every 1% increase after the aforementioned entities reached 5% holding in Shandong Xinchao Energy Corporation, they failed to inform the listed company and make the necessary announcement. Based on the shareholding information of the four shareholders mentioned above, it is estimated that within a few months, Huinenghaitou failed to disclose its increased holdings as required over 10 times, almost weekly, causing significant impact on the stock price. However, the stock price of Shandong Xinchao Energy Corporation had been hovering around 3 yuan in the first quarter without significant increase. For investors who have sold Shandong Xinchao Energy Corporation over the past half year, or are still holding it, they have clearly incurred significant losses. Legally speaking, concealing the relationship of concerted action constitutes inducing empty and fraudulent statements, and the offenders should bear the corresponding civil liability towards the investors. Inducing empty and fraudulent statements refer to the act of disseminating false negative information, or concealing substantial positive news, leading investors to sell stocks at lower prices, only to suffer losses after the falsehoods are revealed and prices rise again. According to the "Provisions of the Supreme People's Court on Several Issues Concerning the Trial of Civil Compensation Cases for Securities Market False Statements", if the plaintiff sells the relevant securities in the context of inducing empty and fraudulent statements, the causal relationship between the investor's investment decision and the false statements is established. Therefore, the perpetrators of irregular disclosure as a form of inducing empty and fraudulent statements should bear the corresponding civil liability towards the investors.