--- title: "JDB's Rocky Road to Relisting: Is There Still Hope for an IPO Within 3 Years?" description: "On November 15, Beijing time, COFCO Packaging, a listed packaging company under COFCO Group, announced that it had received a partial arbitration award from the Hong Kong International Arbitration Centre, confirming that JDB's Hong Kong-registered Wanglaoji Company's application to terminate the capital increase agreement was invalid, and that Wanglaoji Company must compensate COFCO Packaging approximately 230 million yuan plus interest of about 7.73 million yuan. Meanwhile, JDB's core asset, the JDB trademark, must also be injected into Qingyuan JDB Herbal Technology Co., Ltd., as originally agreed." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2019-11-17" categories: "Capital, Earnings & M&A" language: "en" canonical: "https://xinjignxiao.com/en/articles/jdb-s-rocky-road-to-relisting-is-there-still-hope-for-an-ipo-within-3-ye-3f59f334/" markdown: "https://xinjignxiao.com/en/articles/jdb-s-rocky-road-to-relisting-is-there-still-hope-for-an-ipo-within-3-ye-3f59f334.md" original_source: "https://mp.weixin.qq.com/s/vQMpJTnH8zfBO4bTvSpd1Q" translation: "https://xinjignxiao.com/zh/articles/%E5%8A%A0%E5%A4%9A%E5%AE%9D%E7%9A%84%E5%9D%8E%E5%9D%B7%E5%86%8D%E5%88%9B%E4%B8%9A-3%E5%B9%B4%E5%86%85%E4%B8%8A%E5%B8%82%E8%BF%98%E6%9C%89%E5%B8%8C%E6%9C%9B%E5%90%97-3f59f334.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/jdb-s-rocky-road-to-relisting-is-there-still-hope-for-an-ipo-within-3-ye-3f59f334/" citation: "New Distribution. “JDB's Rocky Road to Relisting: Is There Still Hope for an IPO Within 3 Years?.” New Distribution, 2019-11-17. https://xinjignxiao.com/en/articles/jdb-s-rocky-road-to-relisting-is-there-still-hope-for-an-ipo-within-3-ye-3f59f334/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # JDB's Rocky Road to Relisting: Is There Still Hope for an IPO Within 3 Years? > On November 15, Beijing time, COFCO Packaging, a listed packaging company under COFCO Group, announced that it had received a partial arbitration award from the Hong Kong International Arbitration Centre, confirming that JDB's Hong Kong-registered Wanglaoji Company's application to terminate the capital increase agreement was invalid, and that Wanglaoji Company must compensate COFCO Packaging approximately 230 million yuan plus interest of about 7.73 million yuan. Meanwhile, JDB's core asset, the JDB trademark, must also be injected into Qingyuan JDB Herbal Technology Co., Ltd., as originally agreed. On November 15, Beijing time, COFCO Packaging, a packaging company under COFCO Group, announced that on November 14 it received a Partial Arbitration Award issued by the Hong Kong International Arbitration Centre on October 31, 2019, confirming that the application by JDB's Hong Kong-registered Wanglaoji Company (the holder of the JDB trademark) to terminate the capital increase agreement was invalid, and **Wanglaoji Company must compensate COFCO Packaging approximately 230 million yuan, plus interest of about 7.73 million yuan.** At the same time, JDB's core asset, the "JDB trademark," must also be injected into Qingyuan JDB Herbal Technology Co., Ltd., which is held by COFCO Packaging, as originally stipulated in the agreement signed by both parties. **"The above arbitration award is final and takes effect from the date of issuance," COFCO Packaging stated in the announcement.** **-01-** **The Love-Hate Relationship Between JDB and COFCO Packaging** As upstream and downstream enterprises in the beverage industry chain, COFCO Packaging and JDB Group had long fought side by side. COFCO Packaging manufactures beverage cans, food cans, and other packaging made of tinplate, aluminum, and plastic, supplying packaging to downstream manufacturers, and was listed on the Hong Kong Stock Exchange in 2009. However, due to low technical barriers and rising raw material costs such as tinplate, COFCO Packaging's gross and net margins declined from 2016 to 2018. In 2018, COFCO Packaging's revenue was 6.591 billion yuan, with net profit of 260 million yuan; gross margin was 14.72%, and net margin was 4.02%. Facing difficulties in performance growth, COFCO Packaging began seeking cooperation with beverage brands to expand downstream business. JDB, with which it had close ties, became one of the options. **The cooperation between JDB and COFCO Packaging has lasted over 20 years, with 90% of JDB's packaging cans supplied by COFCO Packaging.** Expectations for JDB's restructuring and listing also brought the two companies together. JDB described its strategic goal as: **integrating superior resources to achieve successful listing within three years.** COFCO Packaging's chairman, Zhang Xin, also said in an interview that JDB's restructuring and listing was consistent with COFCO Packaging's initial strategic direction. For this reason, on October 31, 2017, COFCO Packaging announced a capital increase of 2 billion yuan in Qingyuan JDB Herbal Technology Co., Ltd., holding 30.58% of its shares. According to the capital increase agreement signed by COFCO Packaging's investment subsidiary, COFCO Packaging Investment Co., Ltd., the JDB trademark holding company, Qingyuan JDB Herbal, and its existing shareholders, the JDB trademark holding company would inject the relevant JDB trademark into Qingyuan JDB Herbal, valued at 3 billion yuan, accounting for 45.87% of Qingyuan JDB Herbal's shares; the original shareholder of Qingyuan JDB Herbal, Zhishou Co., Ltd., would hold 23.55% of Qingyuan JDB Herbal's shares. According to information from the Fogang County government, the company covers an area of about 618 mu, with a planned annual output of nearly 40,000 tons. In 2014, the company's annual output value reached 500 million yuan. Unexpectedly, the good times did not last long. In July 2018, COFCO Packaging announced that because JDB had not fulfilled its commitment to inject the JDB trademark as in-kind capital contribution into Qingyuan JDB Herbal as per the capital increase agreement dated October 30, 2017, the company had filed an arbitration application with the Hong Kong International Arbitration Centre on July 6, 2018, against Wanglaoji Company, Zhishou, and Qingyuan JDB Herbal. This move meant that **the two sides, which had initially "married," became at odds.** However, just 17 months later, the uncertain tense relationship between the two sides became clear through this arbitration result. **Under the ruling of huge compensation and trademark injection, both sides expressed deep willingness to cooperate and a positive attitude.** COFCO Packaging stated that the arbitration award effectively ensures COFCO Packaging's investment's shareholder rights in Qingyuan JDB Herbal according to the capital increase agreement. After receiving the arbitration award, COFCO Packaging has had effective communication with JDB Group and will work closely with it to jointly promote JDB Group's listing plan. After the arbitration result was announced, JDB quickly posted a "JDB Group Announcement Regarding Arbitration with COFCO Packaging" on its official website, stating that it received the Partial Arbitration Award from the Hong Kong International Arbitration Centre on November 14, 2019, and repeatedly described COFCO Packaging's "joining" as having a "positive impact" on its operations. **-02-** **JDB's Difficult Road to Listing** After years of disputes with Wanglaoji over the red can, JDB finally managed to win a round, securing the final ruling of shared use of the red can. However, along the way, JDB suffered multiple legal defeats and long-term price wars, leaving it battered and bruised. In March 2018, JDB "changed its leadership," with senior executive Li Chunlin becoming the group's president, fully responsible for all JDB and Kunlunshan business. In his "Mobilization Order" to employees, he shouted: "Fight for 45 days, ensure that wherever there is herbal tea, there must be JDB, and wherever there is JDB, there must be red cans and gold cans." At the same time, he frequently spoke in mainstream media, stating his plan to achieve JDB's listing within three years. However, 2018 was a year of misfortune for JDB. **First, JDB's can suppliers COFCO Packaging and ORG successively "called out" JDB and gradually stopped cooperating with it. Then, a bizarre restructuring statement from the "monster stock" Zhonghong Co., Ltd. pushed JDB into the spotlight of public opinion.** News of JDB factory shutdowns, layoffs, and delayed listing were everywhere. It is not hard to guess that JDB made many compromises for its listing dream. When JDB and COFCO Packaging formally cooperated, JDB was facing difficulties such as factory layoffs and production halts. COFCO Packaging only exchanged 2 billion yuan for a controlling stake in Qingyuan JDB Herbal, JDB's core factory, with part of the investment made in the form of aluminum two-piece beverage cans produced by the company. The capital increase plan showed that COFCO Packaging Investment planned to inject 2 billion yuan in three phases, and upon completion would hold 30.58% of Qingyuan JDB Herbal's shares. The original 100% shareholder, Zhishou Co., Ltd., would see its stake reduced to 23.55%. At the same time, the company holding the JDB trademark, namely Wanglaoji Co., Ltd., needed to transfer the JDB trademark to Qingyuan JDB Herbal as a capital increase. According to the capital increase agreement, the trademark was valued at 3 billion yuan, accounting for 45.87% of Qingyuan JDB Herbal's equity. In December 2017, Qingyuan JDB Herbal's registered capital was increased from $40 million to $169 million, and the capital increase agreement had begun to be performed, but JDB had been slow to fulfill its obligations. Therefore, starting from the second quarter of 2018, COFCO Packaging suspended the supply of cans to JDB; in July, COFCO Packaging filed an arbitration application against JDB; in September, COFCO Packaging resumed can supply. Subsequently, JDB began negotiations with COFCO Packaging, and earlier this year, the two sides said they had signed an agreement to continue cooperation in 2019. However, in June of this year, COFCO Packaging announced that it had received a document informing that Zhishou Co., Ltd. had applied to repurchase the 30.58% equity held by COFCO Packaging in Qingyuan JDB Herbal, and was willing to return to COFCO Packaging Investment the total cash and in-kind capital contributions it had made to Qingyuan JDB Herbal, plus interest at an annual rate of 10%. At that time, Zhu Danpeng, a Chinese food industry analyst, said in an interview that when JDB was short of funds, COFCO Packaging came to its aid, but from the terms of the contract at that time, the entire contract was biased toward COFCO Packaging. "JDB hoped to adjust the terms of the agreement, but COFCO Packaging did not agree. At the same time, JDB could not do without COFCO Packaging and had to rely on COFCO for can supply, hence the proposal for a share repurchase plan." In COFCO Packaging's announcement, it showed that COFCO Packaging and its shareholders did not directly oppose the proposal to terminate the arbitration, but said they would consider it carefully. Five months later, JDB's proposal was rejected by the arbitration, indicating that the two sides had not reached an agreement on the repurchase matter mentioned earlier. Judging from COFCO Packaging's previous attitude, it did not directly reject the proposal. But in the end, they failed to reach an agreement, likely because JDB's repurchase could not be settled in one lump sum, and it was highly probable that the payment period would be extended, pushing the timeline further back. For COFCO Packaging, this was unacceptable, as it would only get deeper into trouble. On one hand, JDB felt it had sold its shares too cheaply and was reluctant; on the other hand, it did not have the money to settle the debt at once, and its future listing path was unclear. Under such contradictory circumstances, JDB could only compromise. But as the saying goes, **it is easier to invite a god than to send one away. For JDB to go public, it not only needs to solve external problems but also internal ones.** With COFCO Packaging's support, will JDB be closer to listing? Now that the matter has been settled, we will wait and see how JDB progresses in the future. This article is compiled and edited by Payment of 400-2000 yuan will be made for any tips adopted. --- ## Citation metadata - Publisher: New Distribution - Author: New Distribution - Published: 2019-11-17 - Canonical: https://xinjignxiao.com/en/articles/jdb-s-rocky-road-to-relisting-is-there-still-hope-for-an-ipo-within-3-ye-3f59f334/ - Original source: https://mp.weixin.qq.com/s/vQMpJTnH8zfBO4bTvSpd1Q ## Copyright and AI use This article is sourced from New Distribution. 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