CEFC China Energy

CEFC China Energy (Chinese: 中国华信能源) was a Chinese conglomerate. The company was among the 10 largest private companies in China in 2014.[4] Since 2013 the company was listed on the Fortune Global 500 list holding the rank of 229 in June 2016.[5][6] In March 2020, the company was declared bankrupt as well as its subsidiaries CEFC Shanghai International and CEFC Hainan International.[1] The company used a complex web of affiliated companies to facilitate fake deals, inflate trade figures and obtain bank loans to fuel its aggressive expansion.[7]

CEFC China Energy
TypePrivate
IndustryOil and gas, Financial services
FateBankrupted[1]
HeadquartersShanghai, China
Area served
Worldwide
Key people
Revenue CN¥263 billion (2015)[3]
Number of employees
30 000 (2015)[3]
Websitehttp://www.cefc.co

Industries

In 2014, the company generated revenue mainly from oil and gas (60%) and financial services (25%),[3] but operates also in a wide range of other sectors like transport infrastructure, forestry, asset management, hotel management, warehousing services, real estate development and logistics services.[2] A large portion of CEFC's assets were concentrated in overseas markets.[2]

Controlling shareholder

The controlling shareholder was Shanghai Energy Fund Investment Ltd (SEFI), which was registered under Ye Jianming, the chairman of CEFC.[2] In January 2017, Czech President Miloš Zeman appointed Ye as his economic adviser.[8]

The South China Morning Post, in a 2017 piece on Ye, repeated rumors that had appeared in Czech news media that Ye is linked to the People's Liberation Army and noted "speculation runs wild".[9][10][11]

In March 2018, Ye was detained for questioning on suspicion of economic crimes.[12][13] South China Morning Post reported that "Shanghai Guosheng Group, a portfolio and investment agency controlled by Shanghai’s municipal government, had taken control of CEFC China Energy".[14][15] The state controlled CITIC Group acquired 49% of CEFC Shanghai, a subsidiary of CEFC China Energy. CEFC Shanghai owned CEFC Europe.[16][15] In April 2018, CEFC announced possible layoffs of 15,000 employees, who had not been paid for two months.[17]

Czech investments

In May 2015, the company acquired a 5% stake in J&T Finance Group.[18] This increased to 9.9% in September 2015.[19] In 2017, the company applied to acquire 50% J&T Finance Group, but the deal was refused by Czech National Bank because of lack of sufficient information on the origin of most of the funding for the deal.[20][21]

In September 2015, the company acquired multiple assets in the Czech Republic - a majority stake in brewery Pivovary Lobkowicz Group, a 10% stake in airline Travel Service, 60% in football club SK Slavia Prague and real-estate assets in Prague - the building of the former Živnostenská banka at Na příkopě street and Le Palais Art Hotel Prague.[22][23] CEFC also bought a stake of between 50 and 90 per cent in Czech online travel agent Invia in March 2016, probably with a view to capitalising on the rapidly increasing numbers of Chinese tourists visiting Prague.[24]

After CEFC China Energy invested in Czech media company Empresa Media, the owner of the popular TV Barrandov and magazine Týden, the tone of the group’s coverage of China changed; all neutral and negative reporting about China was replaced by positive reporting.[25]

Failed Rosneft acquisition

In September 2017, CEFC announced the purchase of a 14.16% stake in Rosneft, Russia's largest oil producer, for about $9 billion.[26][27] However, CEFC was unable complete the acquisition and paid a break fee of about $257 million to the sellers, a consortium of Qatar Investment Authority and Glencore.[28]

2018 default

In May 2018, CITIC Group announced they would repay ca 450 million euros owed by CEFC Europe to finance and banking group J&T within days[29] but since the debt was not paid a week later, J&T announced it had taken over shareholder rights and installed crisis management at CEFC Europe.[30] Several days later, CEFC Shanghai defaulted on $327 million in bond payments, and offered to make the payments six months after the maturity date.[31]

References
  1. "Fallen Energy Conglomerate CEFC Declared Bankrupt - Caixin Global". www.caixinglobal.com. 2020-04-25. Retrieved 2020-05-11.
  2. Staff Reporter (11 July 2014). "Mysterious Shanghai private firms makes Fortune Global 500". WantChinaTimes. Archived from the original on 15 July 2014. Retrieved 7 September 2015.
  3. "Corporate Profile". CEFC China. Archived from the original on 4 March 2016. Retrieved 27 December 2017.
  4. "Top 10 private companies in China". China Daily. 20 August 2014. Retrieved 7 September 2015.
  5. "2016年财富世界500强最新排行榜名单 财富世界500强中国110家上榜-理财产品 - 南方财富网". www.southmoney.com. Retrieved 2016-07-24.
  6. Fortune Global 500
  7. "Citic Advances Deal to Buy Czech Assets of CEFC - Caixin Global". www.caixinglobal.com. 2019-04-09. Retrieved 2020-05-11.
  8. "China’s CEFC has big ambitions, but little known about ownership, funding". Reuters. 13 January 2017.
  9. "Opaque Chinese oil group makes clear gains in former Soviet bloc". Financial Times. 13 September 2017.
  10. "Who’s that 39-year-old paying HK$1.4 billion for three office floors?". South China Morning Post. 21 February 2017.
  11. Brady, Anne-Marie (May 9, 2019). "On the Correct Use of Terms". Jamestown Foundation. Retrieved 2019-09-30.
  12. "China detains oil entrepreneur, wiping US$153 million off stocks". March 2018.
  13. "China's CEFC chairman investigated for suspected economic crimes: Source". Reuters. March 2018.
  14. "China takes over nation's biggest private oil group in debt crackdown". 2018-03-02.
  15. "China's CEFC taken over by Shanghai government agency: SCMP report". Reuters. 2018-03-02.
  16. "CEFC China's chairman to step down; CITIC in talks to buy stake in unit". Reuters. 2018-03-20.
  17. "Down and out: CEFC staff go unpaid as once-high flying company flounders". Reuters. 2018-05-04.
  18. "China's CEFC takes stake in Czech-Slovak J&T Finance Group". Reuters. 14 May 2015. Retrieved 7 September 2015.
  19. Čínský konglomerát CEFC už má v J&T desetinu. Usiluje o 30 procent http://ekonomika.idnes.cz/cinska-cefc-zvysila-podil-v-j-t-na-deset-procent-chce-30-procent-pu0-/ekonomika.aspx?c=A150903_135502_ekonomika_rts, Retrieved 25 March 2016
  20. Muller, Robert (2018-01-04). "China's CEFC hits regulatory hurdle in pursuit of Czech JTFG stake". Reuters. Retrieved 2018-03-09.
  21. Johnstone, Chris. "CEFC faces obstacle to Czech purchase of J&T Financial Group stake | Radio Prague". Retrieved 2018-03-09.
  22. Hovet, Jason (2015-09-05). "China's CEFC adds to Czech buying spree with airline, brewery deals". Reuters. Retrieved 7 September 2015.Johnston, Raymond (4 September 2015). "Chinese firm CEFC buys majority stake in Slavia Praha". Prague Post. Retrieved 7 September 2015.
  23. Annual report of CEFC Investment (Europe) Company a.s. for calendar year 2015
  24. Čínská CEFC kupuje podíl v Invii, chce nabídnout servis čínským turistům, iDnes.cz, http://ekonomika.idnes.cz/cinska-skupina-cefc-ovladne-on-line-obchodnika-se-zajezdy-invii-pvn-/ekonomika.aspx?c=A160322_173841_ekonomika_rts, Retrieved 25 March 2016
  25. Karásková, Ivana. "How China Influences Media in Central and Eastern Europe". thediplomat.com. The Diplomat. Retrieved 21 November 2019.
  26. "Why an Enigmatic Chinese Company Just Spent $9 Billion on a Stake in Rosneft. Bloomberg. 2 October 2017."
  27. "China Deepens Oil Ties With Russia in $9 Billion Rosneft Deal". Bloomberg.com. 2017-09-08. Retrieved 2018-03-09.
  28. "Failed Rosneft Deal Costs CEFC China a Quarter-Billion". Caixin.
  29. "UPDATE 1-China's CITIC to pay CEFC Europe's 450 MLN euro debt - CEFC official". Reuters. 2018-05-09.
  30. "UPDATE 2-J&T Private Investments says takes over shareholder rights in CEFC Europe". Reuters. 2018-05-17.
  31. "UPDATE 1-CEFC Shanghai International defaults on $327 MLN in bond payments". Reuters. 2018-05-21.
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