(Yicai Global) May 7 -- Zhejiang Talent Television & Film’s shares ended lower today after it was revealed that the production company, which has deep ties with Chinese movie star Fan Bingbing, will hand control to a local state assets administrator.
Founder Wu Hongliang has agreed to sell control of the business to the State-Owned Assets Supervision and Administration Department of Dongyang city in Zhejiang province, where the company is registered, Zhejiang Talent said in a statement late yesterday.
The company’s stock price [SHE: 300426] closed 1.15 percent lower today at CNY5.18 (73 US cents), after opening 7.8 percent higher and falling as much as 3.4 percent. The benchmark Shanghai Composite Index lost 0.2 percent.
Zhejiang Talent once specialized in costume dramas and was deeply bound up with Fan Bingbing through equity and projects. But Fan was embroiled in a tax scam in July 2018 and the TV series she was in, which was financed by the company, also stalled. That led to losses of CNY127 million last year and CNY952 million in 2018.
Zhejiang Talent will face the risk of delisting if it cannot make a profit this year. Whether the deal will save the company remains unknown.
Wu and Dongyang SASAC will form a new company in which the agency will invest CNY660 million (USD93 million) for an 82.5 percent stake, while Wu will stump up CNY100 million for the remainder.
Wu will transfer 9.08 percent of shares in Zhejiang Talent to the new firm, while entrusting Dongyang SASAC with 20.82 percent of the voting rights. The new entity will hold 9.08 percent of Zhejiang Talent's shares and have 29.9 percent of the voting rights in Zhejiang Talent and became its controlling shareholder.
Wu Hongliang owned 36.31 percent of Zhejiang Talent, of which 99.82 percent has been pledged. So some 36.25 percent of the shares have been pledged, which may scupper the transaction.
Editor: Peter Thomas