Employees of Cross-border Communication received more than 8 million yuan in compensation for losing money on company stocks

In the past two days, the news that Global Easy Shopping filed for bankruptcy shocked the industry. From the former leader of cross-border e-commerce to the current situation, the direction of this big seller is completely unexpected. But a seller revealed that Cross-border E-Commerce has more than one headache recently.

On May 20, Cross-Border Link announced that in 2018, shareholders Yang Jianxin and Xu Jiadong initiated internal employees to increase their holdings of company stocks, and promised to compensate them if the purchase of stocks during the initiative resulted in losses or the returns did not meet the target. Currently, a total of 23 employees have received compensation of 8.35 million yuan.

Optimistic about long-term development, Cross-border Communication shareholders advocate internal employees to increase holdings

Recently, Cross-Border Link released an announcement, introducing the whole story of this incident.

( Cross-border Communication Announcement )

On October 18, 2018, Cross-border Communication received a "Proposal on Internal Employees Purchasing Company Stocks" submitted by Yang Jianxin, then Chairman of the Company, and Xu Jiadong, then Vice Chairman and General Manager (hereinafter referred to as the Proposers):

Based on the company's good fundamentals and confidence in the company's long-term development, Cross-border Communication's stocks have good investment value. The initiator has issued an initiative to employees of Cross-border Communication and its wholly-owned subsidiaries and holding subsidiaries to actively buy Cross-border Communication's stocks. And solemnly promise:

1. During the period from October 19 to November 18, 2018, any employee of the Company and employees of its wholly-owned subsidiaries and holding subsidiaries who meet the purchase conditions, use their own funds (margin trading or structured financing, etc. cannot be used) to net purchase Cross-Border Link shares through secondary market bidding, and continue to hold the shares for 24 months and are still employed by the Company and its wholly-owned subsidiaries and holding subsidiaries, if the employee actually suffers a loss due to the purchase of the Company's shares during the period of the proposed purchase, the initiator shall jointly compensate for the loss, and the proceeds shall belong to the employee personally.

2. If the net purchase of Cross-Border Communication shares by the employees who intend to purchase the shares reaches 24 months, and the return in the first 12 months is less than 8%, and the return in the second 12 months is less than 12% (excluding the 8% in the first 12 months, the same below), the initiator shall make up the difference.

If an employee sells his net purchases of Cross-Border Link shares within 24 consecutive months, or leaves the company for personal reasons within 24 months from October 19, 2018, no compensation will be provided. If the employee holds the shares for more than 12 months but less than 24 months and leaves the company for company reasons, 8% of the first 12 months will be valid.

It is said that after the initiative was issued, employees responded positively and used their own funds to increase their holdings of the company's shares through the Shenzhen Stock Exchange's trading system by means of centralized bidding.

From October 19 to November 18, 2018, a total of 50 employees of Cross-Border Link and its wholly-owned subsidiaries and holding subsidiaries increased their holdings of stocks, with a total increase of 1.6672 million shares. The average purchase price was approximately RMB 11.94 per share, and the total amount of increase exceeded RMB 19.9 million.

Serious losses, 23 employees received compensation of 8.35 million

However, the result was far from the expectations of the two shareholders. From November 2018 to November last year, the share price of Cross-Border Communication fell by about half. Not to mention the profits, the employees who increased their holdings could not even keep their principal.

(Screenshot from Tonghuashun)

This initiative to increase holdings can only end with compensation.

According to the agreement, the initiator must pay a one-time compensation to the employees who intend to purchase the shares from the start of the sale period (i.e. November 19, 2020) and within 20 working days from the date of confirmation of the compensation amount (no later than May 18, 2021).

As of May 20, there were 23 employees who participated in the initiative to increase holdings and met the compensation conditions, with a total compensation amount of RMB 83.51647 million. The initiator has paid the full compensation amount to all employees.

This incident is just the tip of the iceberg of Cross-Border Link’s embarrassing situation.

From the first cross-border e-commerce stock to being besieged on all sides, what has Kuaishou experienced?

This week, news broke that Global Easy Shopping was declared bankrupt by Industrial and Commercial Bank of China Shenzhen Nanshan Branch. Sellers in the industry were in despair, some expressed regret, and some drew lessons from the past big sellers.

Looking back at the experience of Cross-border E-commerce, from the former No. 1 domestic cross-border e-commerce company to the current besieged situation, the fate of this company seems to have been determined long ago. As one seller in the industry said: "It is within expectations and reasonable."

—— Global Easy Shopping was established in 2007

According to public data, in the three years from 2012 to 2014, Global Easy Shopping's revenue was 198 million yuan, 466 million yuan and 1.416 billion yuan respectively.

——In 2014, Baiyuan Pants acquired Global Easybuy

It entered a period of rapid development, with revenue soaring 7 times compared to 2012. That year, the rapidly growing Global Easy Shopping was spotted by the listed company Baiyuan Pants Industry, which acquired Global Easy Shopping for over 1 billion.

Of course, the 1 billion was not wasted. The bet condition of Global Easy Shopping in the transaction was that the net profit achieved from 2014 to 2017 would be no less than 65 million yuan, 91 million yuan, 126 million yuan and 170 million yuan respectively.

——In 2015, "Baiyuan Pants" was renamed "Kuaijietong"

In June 2015, "Baiyuan Pants Industry" was officially renamed "Kuomeitong", becoming the first cross-border e-commerce company listed on the A-share market. With the halo of being the first cross-border e-commerce stock in China, Kuomeitong has gained immense fame.

——Global Easybuy’s revenue exceeded 10 billion in 2017

With the injection of capital and the overall positive development of e-commerce, Global Easy Shopping entered a glorious period of development. From 2017 to 2018, Global Easy Shopping's revenue exceeded 10 billion yuan, and its net profit was 710 million yuan and 247 million yuan respectively, accounting for 81% and 58% of the total revenue of the listed company.

——Xu Jiadong became the actual controller of Kuaishou in 2018

Compared with 2017, Global Easy Shopping's net profit in 2018 shrank by nearly 500 million yuan. Why was there such a large decline?

The official explanation of Global Easy Shopping is: In the second half of 2017, the inventory reserve increased, and the inventory balance increased by about 1.3 billion yuan compared with the end of the previous year; in 2018, liquidity tightened. Under the circumstances of tightening external bank financing policies, the advertising investment and promotion promotion in the fourth quarter sales peak season failed to be carried out as expected, and some historical inventory missed the best sales opportunity. In short, there were too many products on the market, and there was no money for advertising and promotion, so they ended up losing money.

At the same time, in April 2018, Yang Jianxin and Fan Meihua, the actual controllers of the former Baiyuan Pants Industry, signed a "Letter of Intent for Share Transfer" with Xu Jiadong. The two transferred their respective 94.6395 million shares of Cross-Border Communication to Xu Jiadong, with a total value of more than 3 billion yuan. After the transfer, Xu Jiadong became the actual controller of the company.

——In 2019, Cross-border Link lost 2.7 billion

When funds are tight, Cross-Border Communication has to pay more than 3 billion in equity transfer fees. 2019 will be even more difficult for the company!

According to the annual report of Cross-border Communication, in 2019, the company had a revenue of 17.874 billion yuan and a loss of 2.708 billion yuan. The reason for the loss was that the inventory could not be sold and the company had made provisions for bad debts. That year, the company made a large provision for asset impairment of about 2.87 billion yuan.

——In 2020, Cross-border Links suffered a loss of 3.3 billion

In 2020, Cross-Border Link suffered a double blow: on the one hand, it was short of funds and had to repay debts; on the other hand, under the influence of the global epidemic, it had no money to meet business development. Its annual revenue was 17 billion yuan, a decrease of 4.77% year-on-year, and the net profit attributable to shareholders of the listed company was -3.3 billion yuan. Subsequently, Cross-Border Link was delisted.

(Picture from Cross-border Communication Announcement)

Talking about the reasons for the loss, Cross-border Communication said that Global Easy Shopping's business declined sharply, some businesses were shut down, and the staff was reduced by about 3/4. The short-term high severance costs and other losses caused by the staff reduction led to a loss of about 2.5 billion yuan for Global Easy Shopping.

Due to the layoffs, the need to compensate employees by buying stocks and repaying other external debts, Cross-Border Link is facing financial difficulties.

——In 2021, Cross-border Communication sold Paton and filed for bankruptcy

In 2021, Cross-Border Communication sold its most profitable Paton to "cut off its tail and save itself", and received a transfer fee of 2.02 billion yuan. The purpose of this transaction is to recover cash to fill the working capital gap and repay debts.

Looking at it now, the 2 billion yuan is still not enough to "save" Cross-Border Link. The recent news of bankruptcy filing may indicate that the glory of the former bigwig is now a thing of the past.

Cross-border communication, stocks, employees