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"Risk comes from not knowing what you're doing" Warren Buffett I look and sift the world for such misplaced bets. When I occasionally find one, I first exploit it for profit. Then, I write about it for anyone else interested in such ideas. Twitter: @unemon1 Scribd:... More
  • - Erduosi Hengtai Coal Co., Limited - Some Additional Information 0 comments
    Jun 10, 2013 2:05 PM | about stocks: YNSKF

    PLEASE BE CAREFUL SINCE THIS REPORT IS BASED ON THE ASSUMPTION THAT INFO AT CREDITSX IS ACCURATE AND UP-TO-DATE. USUALLY THAT IS THE CASE, AND WE NEVER HAD PROBLEMS SO FAR. OF COURSE, YOU NEVER KNOW.

    Magic Field International Limited, a direct wholly-owned subsidiary of Yun Sky (now King Stone Energy) indirectly acquired the Eerduosi Hengtai Coal Company Limited from Mr. Zhao Ming at a consideration of HKD 1'855m. The Acquisition target, wholly owned by Mr. Zhao Ming, was Triumph Fund A limited, which indirectly owns a 94.05% stake in Eerduosi Hengtai Coal Company Limited

    For more details about the acquisition see the related Circular published by King Stone Energy (see here).

    Below is the current audited ownership structure disclosed in King Stone Energy periodic filings:

    We present here some additional Info about the two Investment Co. mentioned in the figure above, namely Shanxi Hengchuang Industrial Co., Ltd. and Shanxi Puha Deqin Metallurgy Technology Co., Ltd.

    Shanxi Hengchuang Industrial Co., Ltd

    Shanxi Hengchuang is a wholly foreign owned company duly incorporated on 31 March 2008 in the PRC, whose sole shareholder is the TFA, which is an investment holding company. There has been no change in its management and corporate structure since the date of its incorporation. Except for acquiring and holding 99% equity interest in Shanxi Puhua, Shanxi Hengchuang has not commenced any business operations since its establishment (KSE 2009 Circular here)

    For our purpose 2 aspects are of particular interest, namely the Enterprise Address (企业地址) and the Legal Representative (法定代表人姓名)

    Enterprise Addres: 太原市小店区学府街426号(三层301-303)| Floor 3rd, No. 426, Xuefu Street, Taiyuan.

    Legel Representative: 薛振东 | Xue Zhendong

    太原市小店区学府街426号(三层301-303)corresponds to the addres where Puda Group Headquarters are located. On三层301-303 (third floor) is where the offices of the Coal Segment of the Grup (Puda) are to be found. See image below:

    Among Other Companies with the same reported Enterprise Address we find for example:

    • 山西普太物资有限公司|Puda Inc. Related -太原市学府街426号
    • 山西普大东强煤化有限公司|Puda Inc. Related -太原市学府街426号
    • 山西瑞昶煤焦有限公司|Puda Inc. Related -太原市学府街426号
    • 山西普大煤业集团有限公司|Puda Inc. Related -太原市学府街426号
    • 山西博雅都园房地产开发有限公司| Zhao Ming Ch. - 太原学府街426号山西

    普大世纪汽车城3层301

    • 山西普大矿业有限公司| Zhao Ming Ch. -太原市学府街426号

    Just to mention a few …

    The legal Representative of the Company is: 薛振东 | Xue Zhendong.

    Date of Birth: 19 December 1977

    ID Number: 142326197712194718

    This Person, among other roles, at the end of August 2012 held the position of supervisor at Shanxi Puda Coal Industry Group Co., Ltd. -山西普大煤业集团有限公司, the notorious company at the Center of the Puda Coal Inc. scandal.

    From the Shanxi Puda Coal Industry Group Co., Ltd. SAIC File:

    Here are some other positions that Xue Zhendong has been appointed to during his career (born 1977):

    序号

    职务

    证件编号

    任职日期

    离职日期

    任命单位

    法定代表

    1

    监事

    140100200334716

      

    太原锦胜博雅房地产开发有限公司

    2

    监事

    140191205004770

      

    山西博雅都园房地产开发有限公司

    3

    执行董事

    140100400006327

      

    山西恒创实业有限公司

           

    4

    监事

    140000100102958

      

    山西龙威甲醇石化燃料有限公司

    5

    监事

    140000100065871

      

    山西瑞昶煤焦有限公司

    6

    董事长

    140000200041991

    2009-09-29

     

    山西普华德勤冶金科技有限公司

    7

    执行董事

    140000200041991

      

    山西普华德勤冶金科技有限公司

    8

    董事长

    140000200027869

    2009-07-27

     

    山西隆鑫煤焦有限公司

    9

    执行董事兼总经理

    140000200027869

      

    山西隆鑫煤焦有限公司

    The first thing to note is that all the 9 companies mentioned above are somehow related to Mr. Zhao Ming / Puda Group. For Example, Companies 1 and 2 are the Entities associated to Puda Group operating in the Real Estate industry, while Company 5 should be an indirect Subsidiary of Puda Coal Inc.

    We highlighted in yellow the Companies related to King Stone Energy and crucial for its control over the Hengtai Coal Mine.

    Company 6 = 7 is Shanxi Puha Deqin Metallurgy Technology Co., Ltd. -山西普华德勤冶金科技有限公司

    Company 3 is Shanxi Hengchuang Industrial Co., Ltd -山西恒创实业有限公司

    Xue Zhendong is not only the legal representative of both companies but he is also the Chairman of the board (董事长) and the Executive Director (执行董事) of Shanxi Puha Deqin Metallurgy Technology Co., Ltd. -山西普华德勤冶金科技有限公司 as well as the Executive Director (执行董事) of Shanxi Hengchuang Industrial Co., Ltd -山西恒创实业有限公司

    Very interesting is that Xue Zhendong has been appointed as the Chairman of the Board of Shanxi Puha when Mr. Zhao Ming was negotiating the sale of the Hengtai Coal Mine to King Stone Energy.

    .

    The last time we saw a similar structure/division (better say, non-division) of power was when reviewing our Puda Coal Inc. investment. Putai Resources was indirectly (by the mean of a BVI) controlled 100% by Puda Coal Inc. Putai Resources owned a 90% stake in (SPCG) Shanxi Puda Coal Industry Group Co., Ltd. Mr Yao Zhao was the legal representative as well as the CEO of Putai Resources. Putai Resources was owned 100% by Puda BVI which in turn was owned 100% by Puda Inc.

    Mr Yao Zhao, as the legal rep and CEO of Putai Resources sold 90% of SPCG to his brother Mr. Zhao Ming for about 90m RMB, a price probably 95% below the true market value.

    This caused Puda Coal Inc. to become an Empty Shell. For a complete narrative of what exactly happen please refer to the Complaint filed by the SEC against Mr. Zhao Ming and Mr. Zhu Liping (see here). Apparently US investors stay no chance to recover their losses from a Chinese Citizen.

    The Ownership Structure of the Hengtai Coal Mine is very similar to the one that was in place for the Puda Coal Inc ownership in (SPCG) Shanxi Puda Coal Industry Group Co., Ltd.Mr. Xue Zhendong, seems to cover that same key positions Mr. Yao Zhao did in the Puda Coal Inc. story.

    We know how it ended the last time a person related to the Puda Group universe had this kind of powers: 509.1M USD were wiped out of the U.S. financial markets.

    Shanxi Puha Deqin Metallurgy Technology Co., Ltd.

    Shanxi Puhua is a PRC domestic company with limited liability duly incorporated

    on 19 June 2003. The Company is a 99% owns Subsidiary of Shanxi Hengchuang Industrial Co., Ltd. At the moment the company does not have any operating activity and is used as an (investment ?) vehicle to control the Erdousi Hengtai Coal Company Limited. The Company owns a 45% stake in the New Fund Management Company formed under the JV with Shanxi Minerals and CITIC. The Funds are managed by the company together with CITIC.

    For our purpose 2 aspects are of particular interest, namely the Enterprise Address (企业地址) and the Legal Representative (法定代表人姓名)

    Enterprise Addres: 太原市小井峪街30号| Floor 3rd, No. 426, Xuefu Street, Taiyuan.

    Legel Representative: 薛振东 | Xue Zhendong

    Noteworthy is also the fact that Mr. Zhao Ming is listed as a Supervisor of this Company.

    太原市小井峪街30号corresponds to the addres where Puda Group Associated Enterprises have their addresses, such as for example:

    • 山西隆鑫煤焦有限公司 | Absorbed by Puda in March 2010 - 太原市小井峪街30号
    • 太原锦胜博雅房地产开发有限公司 | Puda Group RE Co.- 太原市小井峪街30号
    • 山西隆鑫煤焦有限公司 -太原市小井峪街30号2号

    The legal Representative of the Company is: 薛振东 | Xue Zhendong.

    Date of Birth: 19 December 1977

    ID Number: 142326197712194718

    • See section Shanxi Hengchuang Industrial Co., Ltd

    Disclosure: I am long OTC:YNSKF.

    Additional disclosure: 00663 HK

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