Second, Delong incident:
1 and Delong's primitive accumulation
1986, the down brothers, the founder of Delong, went to the sea to do business from state-owned enterprises and opened a color photo printing shop. 1990, they went to Beijing to open a disco. By 1993, Beijing discos alone had brought them more than 30 million yuan in profits.
2. Delong's breathtaking jump
1990, China stock market rose, and Wanli Tang and Tang Wanxin brothers seized the opportunity to invest tens of millions of original accumulated funds into the emerging China stock market. By buying stock subscription certificates and original shares and participating in the speculation of Shenzhen and Shanghai stock markets, its capital scale has developed by leaps and bounds. They found that the historical cost of "Xiang Torch" with 50 million shares in circulation was very low, and the price per share was near 2.3 yuan, so they started to build positions on "Xiang Torch" together with several well-known big families. By July of 1996, the Down Brothers and their friends had already held 70% of the outstanding shares of "Xiang Torch", which also rose from 2.3 yuan to 4 yuan, up by 60%.
From 65438 to 0997, the Tang brothers registered and established Delong Investment Company in Xinjiang, providing favorable conditions and obtaining the controlling right of "Xiang Torch". They quickly completed the acquisition through borrowing funds and entered the decision-making level of "Xiang Torch" company. And in the annual reports of 1997 and 1998, the generous schemes of 10 for two shares and 10 for nine shares were introduced respectively, and the share price of "Xiang Torch" rose rapidly to 10 yuan on 1997, surpassing 20 yuan.
After 1998, Delong Investment Co., Ltd. obtained the ownership of "Tunhe, Xinjiang" and "Alloy Shares" by means of loans, borrowing from control companies and uniting more investors, and the "Delong System" was formally formed. By controlling the tradable shares and large-scale delivery, the share prices of all three companies have risen by at least 20 times. At the peak, the market value of the stocks controlled by Delong has exceeded 20 billion yuan.
3. The collapse of Delong dynasty.
In July, 20001year, China stock market finally experienced a "stock crash" after five years of bull market. Delong didn't realize the disaster in advance. The price of three old stocks in Delong is really too high. Book profit is almost impossible to achieve, and there are so many loans and borrowing funds that need to be returned in time. In order to cash out the book profit, Tang finally found a solution, that is, to use Delong's influence and social relations formed over the years to intervene in high-quality industries on a large scale, and then inject industries with higher profits into listed companies, reduce the P/E ratio of listed companies, form a reasonable investment value, and then ship them. However, while the fundamentals of listed companies have improved, Delong has formed huge bad debts (including capital interest) in other unlisted industries. The Delong system even feels more and more trapped in a vicious circle that is inexplicable. The scale of the industry is getting bigger and bigger, the debt is getting heavier and heavier, and the only visible profit is the price difference of listed companies. After deducting these unrealized price differences, the company is almost insolvent.
After 2003, the State Council, China Securities Regulatory Commission and some local governments have begun to realize the huge financial risks behind Delong's high share price, and have consciously taken some measures to restrict Delong from entering certain industries, and at the same time increased the efforts to restrict illegal funds from entering the securities market.
On April 14, 2004, in order to reduce the debt pressure and ease the government's restrictions on it, Delong had to choose the path of diving in the stock price to cash out. Delong Troika-Hunan Torch, Xinjiang Tunhe and Alloy Investment collectively fell for the first time. This not only reflects that the market's loss of confidence in Delong is accelerating, but also increases the authenticity of Delong's capital chain fracture circulating in the market. In the subsequent Delong dynasty, cracks appeared between subsystems or related systems and Delong, and contradictions were exposed one after another, which made Delong's completely focused industrial chain begin to collapse. In particular, Delong's left-arm and right-arm troika turned against each other, sweeping away the snow and actively seeking to get rid of Delong's control, which made the most mysterious financial veil of Delong Dynasty unveiled layer by layer. Delong is surrounded by unprecedented loneliness, and Delong is entangled in endless troubles. Delong has reached a dangerous situation where he cannot extricate himself.
As a last resort, Huarong Asset Management Company (hereinafter referred to as Huarong Company) was ordered by the central bank to save Delong.