Key facts
- Haidilao founder Zhang Yong is receiving a 30-day loan of up to 100 million yuan from the company.
- The loan is for Zhang Yong's personal financial arrangements and cannot be used to buy Haidilao shares or lend to third parties.
- The transaction is considered a connected transaction for Haidilao, requiring only an announcement.
- Zhang Yong's wife, Shu Ping, recently cashed out approximately HK$2.751 billion by selling Haidilao shares.
- China's deadline for settling offshore trust taxes without late penalties is October 22.
Haidilao International Holding has agreed to provide its founder, Zhang Yong, with a short-term loan of up to the Hong Kong dollar equivalent of 100 million yuan (US$14.9 million). The move has sparked market speculation, particularly in light of China's upcoming October 22 deadline for offshore trust taxation.
The hotpot chain stated in a filing that the loan would be funded from internal resources and carry an interest rate of 0.6 percentage points above the 1-month Hong Kong dollar interbank offered rate, with a term of 30 days. The funds are designated for Zhang Yong's personal financial arrangements and cannot be used for purchasing Haidilao shares or providing loans to third parties.
This transaction is considered a connected transaction for Haidilao, requiring only an announcement due to its relatively small scale. The company stated that the loan is in its overall interest and that of its shareholders, as it has sufficient funds and the loan will generate interest income.
This practice of listed companies directly lending to controlling shareholders is uncommon. It follows a period where Zhang Yong's wife, Shu Ping, sold shares worth approximately HK$2.751 billion (US$350 million) in September, citing personal capital needs. This share sale, which reduced the controlling shareholder group's stake to 45.49%, occurred shortly after China announced new regulations on individual income tax for offshore trusts, closing a loophole previously used by wealthy families.
Analysts have linked Shu Ping's share disposal to these new tax regulations, which have raised concerns about potential selling pressure on other founder-controlled companies with offshore trust structures. The deadline for settling these tax obligations without late penalties is October 22.