BSH: The Elusive Mr King – Pt 2

The first article written on December 1 can be viewed here.

On Thursday December 14, an announcement was made to the stock exchange confirming that, subject to conditions being met, there was to be a share subscription which would result in two companies – Chigwell Holdings Ltd and Dragon Villa Ltd – each owning over 5% of stock in BSH.

The announcement confirms that

There will be no proceeds arising from the Subscription as the aggregate Subscription Price payable by each Subscriber to the Company on completion of the Subscription shall be offset by an equivalent amount which is owed by the Company to each Subscriber.

What this means in plain English is that BSH have swapped debt owed to Chigwell Holdings and Dragon Villa for equity in BSH. The amount of debt that has been paid off in this manner can be calculated thus:

Chigwell – 500,000,000 shares @ HK$0.14 each = HK$70million (approx £6.728million)

Dragon Villa – 714,286,000 shares @ HK$0.14 each = HK$100million (approx £9.612million)

No details were given in the stock exchange announcement as to who the owners of either company were.

As I my (edited) post on Friday confirms, Chigwell Holdings Ltd is a Hong Kong company, which according to its last annual return (dated 10 January 2017) names Lainn Yee Ltd of the British Virgin Islands as its 100% shareholder.

As a BVI company, normally Lainn Yee Ltd would be virtually untraceable. However, this company is mentioned in the Panama Papers and as such we are able to see that company’s shareholder history until 2015.

Through a complex web of nodes, it’s actually possible to see that Lainn Yee Ltd and Dragon Villa Ltd are related companies – with both having a lady by the name of Chung Peggy Bei as a shareholder in their shared previous history.

For now though, I want to concentrate on Lainn Yee Ltd.

The Panama Papers names Wang Lehai as a shareholder in Lainn Yee Ltd, giving an address in Longkou, Shandong Province for Mr Wang.

Curiously enough, that same person is also listed as a director of Sino-Thai Huafeng Industry (Group) Ltd (中泰华丰实业（集团）有限公司) – a company part-owned by the aforementioned “Mr King”, Wang Yaohui.

Furthermore, while Wang Yaohui now only owns a small part of Sino-Thai, the larger chunk is owned by a company called Beijing Hong World Mastery Trading Group (北京宏世通达商贸集团), which names Wang Lehai as owner, director and legal representative.

Another connection between the two is Zhongtian Transtech Services Special Vehicles Co Ltd (中天高科特种车辆有限公司), which is owned in part by companies controlled by Wang Lehai and Wang Yaohui – and which also lists Birmingham Sports Holdings Chairman Zhao Wenqing as “Supervisor”.

However, the Panama Papers are historic to 2015 – they do not confirm the current owners of Chigwell Holdings Ltd.

For this, we need to dig a little deeper.

Chigwell Holdings Ltd and U Credit (HK) Ltd

A further search of the Hong Kong company registry of details about Chigwell Holdings Ltd gives this document dated April 10, 2017.

The document confirms that on that date a debenture was created whereby U Credit (HK) Ltd held a first floating charge of all assets of Chigwell Holdings as collateral for a US$40million loan made to the Chigwell.

What this means is that in return for holding a mortgage over everything Chigwell Holdings owned, U Credit lent them around HK$312million.

Importantly, the document also confirms the name of the person borrowing the money, naming Wang Yaohui as the borrower. This document establishes “Mr King” as the owner of Chigwell Holdings at that the time of the document being published.

What complicates matters further is that U Credit (HK) Ltd is a wholly owned indirect subsidiary of China Strategic Holdings Ltd, who made this announcement to the Stock Exchange where they confirmed the loan in the document above but interestingly, not the loanee.

China Strategic lists only one person as a shareholder with a discloseable number of shares in the company – Paul Suen Cho Hung, who happens to own Trillion Trophy Asia. Suen owns just under 10% of China Strategic.

China Strategic also lists Daniel Sue Ka Lok (a non-Executive Director of BSH) as an Executive Director and Anita Chan Yuk Yee (an Executive Director of BSH) as Company Secretary.

What does this mean for BCFC?

This is the tough part to understand, and I have no doubt that this article only sheds light on a fraction of the whole situation concerning Birmingham Sports Holdings, Paul Suen and Wang Yaohui (“Mr King”) – so please bear in mind there is still much more to this story.

There are some incontrovertible facts however, proved by documents in the public domain. These are

1) China Strategic, a company part owned by Paul Suen Cho Hung and who counts two of his placemen as part of their board management lent US$40million (HK$312million) to Chigwell Holdings – a company which lists Wang Yaohui – “Mr King” – as the borrower.

and

2) Chigwell Holdings then subsequently lent at least HK$70million to Birmingham Sports Holdings, which is to be repaid in equity in the company.

I must confess I have no idea as to why a company that Paul Suen part-owns lent money to a company, only for it to lend to another Paul Suen part-owns. As I said previously, I think there is more to this transaction that we cannot see and that until we know this we have to bear in mind we don’t know the full story.

Once the subscription deal is complete Chigwell Holdings will own at least 5% of BSH. However, until the disclosures are filed, we will not know for certain who Chigwell Holdings names as their current controlling shareholder. The Long Stop Date for this transaction is January 15, 2018.

Should the disclosure show that Wang Yaohui is the ultimate controlling shareholder of Chigwell Holdings then “Mr King” will officially own a part of BSH.

Five percent ownership isn’t enough for Wang Yaohui to be forced to take the Owners and Directors Test administered by the EFL as that threshold is 10% ownership of the club itself.

However, this is another piece of a puzzle which is the ownership of Birmingham City FC.