SHANGHAI: Tsinghua Unigroup<\/a> Chairman Zhao Weiguo<\/a> opposes the pending investment into the company from Jianguang Asset Management (JAC Capital) and Wise Road Capital<\/a>, China<\/a>'s National Business Daily reported late on Wednesday, citing a memo from Zhao<\/a>'s investment fund.
Zhao's opposition to the deal marks a potential further hurdle for the sale and restructuring of Unigroup<\/a>, a conglomerate once poised to be a key Chinese semiconductor company.
Unigroup said last Friday that JAC and Wise Road Capital would become its strategic investor. The deal has yet to receive final approval from authorities. State media have reported that JAC and Wise Road will invest 60 billion yuan ($9.4 billion) in cash as part of its investment in Unigroup.
According to the memo cited by the newspaper, Zhao alleged that JAC and Wise Road's plan to save the debt-ridden Unigroup would result in losses of 74.3 billion yuan in state assets. He also argued that the terms of the investment undervalue certain assets of Unigroup, such as memory chip maker Yangtze Memory Technologies Corp.
Wise Road Capital and JAC did not immediately respond to a request for comment sent on Thursday. A Unigroup spokesperson declined to comment.
Under Zhao's leadership, Unigroup invested aggressively in various chip companies, in tandem with a government push to boost China's semiconductor industry.
Yet few of those bets turned out successful, which caused the company to cross-default on onshore and offshore bonds worth about $3.6 billion by the end of 2020. The following year it received a court order calling for its restructuring.
Zhao's holding firm Beijing Jiankun<\/a> holds a 49% stake in the Tsinghua Unigroup, with the remainder held by China's elite Tsinghua University.
After the company defaulted on its bonds in November 2020, Beijing's State Council appointed a working group to assume leadership of the company, as summarized in Zhao's memo.
Zhao's opposition could further complicate the deal to find new ownership for Unigroup, which owns H3C, a maker of parts for data centres, and Unisoc, a maker of processors for smartphones and other hardware devices<\/a>.
JAC Capital and Wise Road, two closely linked private equity firms indirectly owned by China's State Council, were in competition against Chinese tech giant Alibaba Group Holding Ltd to purchase Unigroup, according to sources.
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