Thu, Dec 23, 2021 page11

• US$9bn rescue turning into ‘a crime’: chip mogul

  TAKEOVER: Tsinghua Unigroup’s custodian insists that JAC’s winning bid was fair, as Zhao Weiguo vowed to fight the deal, saying it would result in huge state asset losses

  • Bloomberg
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  Tsinghua Unigroup Co (清華紫光) chairman Zhao Weiguo (趙偉國) has vowed to “fight to the end” a secretive fund’s takeover proposal, amplifying an unusually public dispute over the troubled chipmaker’s US$9 billion rescue plan.

  Zhao, whose company controls 49 percent of the debt-ridden semiconductor giant, is doubling down on a rare outburst this month against a takeover bid led by JAC Capital (建廣資產管理).

  Zhao’s holding firm, Jiankun Investment Group Co (健坤投資集團), is now intent on unearthing the backers behind JAC, a fund headed by reclusive financier Li Bin (李濱) that has kept a low profile until its consortium emerged as Unigroup’s winning bidders, the executive told Bloomberg News in an exclusive interview on Tuesday.

  

  A researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research center in Beijing on Feb. 29, 2016.

  Photo: Reuters

  The public spectacle around the envisioned rescue of one of China’s most important semiconductor players has transfixed an industry accustomed to meticulously crafted private deals.

  In a communique distributed last week, Zhao singled out how JAC’s deal valued Yangtze Memory Technology Corp (長江存儲科技) — one of Tsinghua group’s prime assets — at just 47.9 billion yuan (US$7.5 billion), versus a deserved valuation closer to 160 billion yuan. Zhao claimed in his memo that JAC’s rescue plan would result in 73.4 billion yuan of state asset losses.

  Zhao’s outcry ignited a public spat that state censors have so far allowed to flourish in government newspapers and social media. Tsinghua’s court-appointed custodian on Friday last week rebuked Zhao for landing Unigroup in its current predicament in the first place, through years of reckless expansion.

  It added that the bidding process that resulted in JAC’s winning bid was fair and it would continue to work with creditors to get the proposal approved during a meeting on Wednesday next week.

  “The proposed deal is an intent to commit a crime,” Zhao said from the top floor of Unigroup’s headquarters in northern Beijing. “Even if the creditors’ committee approves the deal, I will fight a legal battle until the end.”

  Representatives for Unigroup, the court-appointed custodians and JAC did not respond to messages and calls seeking comment.

  Zhao’s stance threatens to disrupt the proposed rescue of Unigroup, which has become a national security issue since Chinese President Xi Jinping (習近平) advanced a strategy for self-sufficiency in key technologies in competition with the US.

  The Beijing-based company linked to prestigious Tsinghua University — Xi’s alma mater — remains a linchpin in a race for technological supremacy.

  JAC and private firm Wise Road Capital (智路資本), both controlled by Li, had offered 60 billion yuan to pay off debts to creditors.

  Any agreement would likely include conditions for restructuring Unigroup’s roughly 100 billion yuan-plus of onshore and offshore debt, Bloomberg News reported last month.

  “I don’t regret inviting the government to handle Unigroup’s case,” Zhao said on Tuesday. “There was also no problem from the government’s decision level.”

  The Chinese semiconductor titan last year defaulted on a bond and in July, a court ordered it to overhaul its debt, prompting it to invite strategic investors with deep pockets, as well as the capability to run a major chipmaking and cloud business.

  “Unigroup’s high debt ratio wasn’t enough” to hurt the company, Zhao said.

  However, a confluence of factors, including the pressure on academic institutions and COVID-19, spooked creditors.

  “There’s no reason why I can’t win this case,” he said.
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