Even on the weekend, the real estate market is still not very peaceful, on the one hand, the Chinese character AMC is preparing to issue bonds to bail out high-quality projects of housing enterprises, and on the other hand, the thunderstorm of high-leverage housing enterprises continues.
On the evening of February 18, Zhengrong Real Estate officially announced that the debt that was about to mature in March was expected to be unpaid, including the US$200 million perpetual bonds previously announced to be repurchased on March 5. On February 11, there was news that the company could not redeem the perpetual bond, and Zhengrong Real Estate immediately collapsed by 80%, but the company then "clarified" the rumor twice, saying that the news was "untrue and false". Some netizens said that now looking at the company's own announcement is false, and some shareholders on the stock bar platform rush to the bottom of the "clarification announcement" to be covered.
Also on the evening of February 18, after nearly three weeks of brewing, another 100-billion-yuan Fujian real estate, Sunshine City, finally replied to the Shenzhen Stock Exchange's letter of concern, and the situation was worse than expected: the company's available funds accounted for less than 1% of the book funds, and cash had dried up. At present, due to the failure to repay the interest of 170 million yuan of foreign debt, which has triggered a large-scale cross-default, the company reminds investors to fully understand the risk factors disclosed by the company and pay attention to investment risks.
At the same time, Xiamen Bank from Fujian announced that it sued Sunshine Group, the controlling shareholder of Sunshine City, its concerted action person Kangtian Industry, and The actual controller of Sunshine City, Lin Tengjiao, for a loan dispute, involving a principal of 365 million yuan and corresponding interest, penalty interest and compound interest. The above-mentioned loan used 111 million shares of Sunshine City stock as a pledge, and it is likely to face freezing or compulsory reduction in the future, at present, Sunshine Group and its co-actors have accumulated 424 million shares frozen, and the cumulative forced reduction of 146 million shares.
Zhengrong Real Estate "rumors" confirmed
There are shareholders who copy the bottom quilt cover
Zhengrong Real Estate announced on January 4 that it intends to redeem the remaining US$200 million perpetual bonds on March 5, 2022. However, on February 11, the news suddenly came out: Zhengrong Real Estate was tight on funds and could not redeem the $200 million perpetual bond that had been extended as planned, and the company's overseas bonds would be restructured. Under the influence of the news, Zhengrong Real Estate and its property company Zhengrong Service both flashed in the afternoon of February 11, and the decline on the day was once more than 80%, and the closing decline was also around 60%.
A short weekend later, on February 14, Zhengrong Real Estate issued an announcement to urgently debunk the rumors and "clarify", saying that "the Board hereby clarifies that these newspapers are untrue and false, and the Company expressly reserves all rights to pursue legal liability to authors, media and parties responsible for inaccurate information". However, after the "clarification announcement" was issued, Zhengrong stocks and bonds still fell more than once, Zhengrong Real Estate fell by 25% in two days, and the company re-issued the original version of the "clarification announcement" on February 15. (See the February 14 report "Stocks and Debts Continue to Kill!") Some shareholders have a huge loss of 70% "dare not look", 100 billion leaders urgently clarified, rare announcement of credit lines" ("
But what I didn't expect was that after only three days, the company punched itself in the face.
On the evening of 18 February, Zhengrong Real Estate announced that since the announcement of the proposed repurchase, the Company's internal funds available to pay off its debts have become increasingly limited, and as a result, "the Company anticipates that its existing internal resources may not be sufficient to resolve its debts due in March 2022 (including the full redemption of securities on March 5, 2022)". The Company "is seeking the consent of the beneficial owners of securities to propose certain proposed exemptions and amendments to securities based on the consent set out in the Memorandum of Consent".
To attract the consent of the holders, the company offers a 1% "consent fee" and a 0.75% "incremental fee". However, the announcement stressed that "there is no guarantee that the consent solicitation will be completed and the Company reserves the right to amend, withdraw or terminate the consent solicitation conditionally or unconditionally."
The Company expects market conditions in the real estate sector to remain under pressure in 2022, with the Company remaining cautious about its short-term liquidity in the absence of a significant pick-up in the market and a pick-up in multiple financing options. In addition to the above-mentioned rollover consent solicitation, the Company is also considering "other debt management actions in the near future in respect of other outstanding offshore senior notes".
Many shareholders expressed anger at the company's behavior of first clarifying "rumors" twice but finally settling down. Some netizens said that "we were miserable, everyone believed your notice before buying" "After all, it was a real hammer, did not come out early to lose a lot", "scam companies", and many netizens said that they wanted to report to the SECURITIES Regulatory Commission, as well as claims.
Sunshine City cash depletion in a large-scale default
The company reminds investors of the risks
On the evening of February 17, Sunshine City just announced that two US dollar bonds with interest of 170 million yuan could not be repaid (see the February 18 report "Sudden! 100 billion real estate has exploded again"), on the evening of February 18, a series of key information was disclosed in the reply announcement to the letter of concern to the Shenzhen Stock Exchange, and the situation was even more severe than imagined.
What is the overall situation of the company's debt at present?
According to the announcement, as of the end of September 2021, the company's interest-bearing debt totaled 84.9 billion yuan, and the financing cost reached a maximum of 12.5%, of which a total of 61.4 billion yuan was due within 1 year and 1 to 2 years, accounting for more than 70%, facing the pressure of centralized payment. Specifically, the maturity within 1 year is 24.798 billion yuan, accounting for 29.2%, the expiration within 1-2 years is 36.567 billion yuan, accounting for 43.05%, the maturity in 2-3 years is 17.148 billion yuan, accounting for 20.19%, and the expiration of more than 3 years is 6.425 billion yuan, accounting for 7.56%.
But the company has no money on its books, which is why less than 200 million interest is difficult to defeat the 100 billion heroes.
The announcement said that as of the end of December 2021, the company's monetary funds on hand had dropped sharply compared with the beginning of the year, and "the flexible funds available in practice accounted for less than 1% of the book funds". The company gave several reasons: first, the pre-sale funds are limited; second, the financing channels are blocked; third, the project company's funds cannot be transferred back to the group, "because the overall environment continues to be severe, financial institutions and shareholders of the project partners are very cautious about the project company's funds to the group."
The company's restricted assets are mainly inventory, monetary funds, long-term equity investments, investment real estate, fixed assets, intangible assets and other non-current assets pledged by borrowing, etc., as of the end of June 2021, the total book value was 121.52 billion yuan, accounting for 33.92% of the company's total assets. In other words, one-third of the assets are restricted, and the proportion is relatively high.
From the perspective of financing, from January to September 2021, the net cash flow generated by the company's financing activities was -31.907 billion yuan, while the net cash flow contributed by financing activities in 2020 was positive 600 million yuan, which was obvious compared with the collapse.
From January to September 2021, the cash flow generated by the company's operating activities did not have much of a decline, with a net amount of 20.789 billion yuan, down only 4.7% from the same period last year. However, the Sunshine City thunderstorm occurred in the fourth quarter, and the entire sales fell in the fourth quarter, and there was a cliff. The company forecasts a non-net profit loss of 7.3 billion yuan to 8.6 billion yuan in 2021, the main reason is that the inventory price fell and then made an impairment provision.
Judging from the projects with a price reduction of more than 200 million yuan, the selling price of many projects cannot cover the project cost. For example, the unit price of a project in the mainland has dropped from 18,300 yuan per square meter to 16,400 yuan; the unit price of a project in Fujian has not yet opened, from 87,200 yuan to 64,200 yuan, a decrease of 26%; the price of a project in the Yangtze River Delta has dropped from 119,000 yuan to 89,000 yuan, a drop of 25%, and the pearl river delta has an area of 330,000 square meters and a total cargo of 15 billion yuan, with a unit price of 22,300 yuan to 19,800 yuan, and the estimated price decline is about 630 million yuan.
At present, due to the failure to repay the interest on the aforementioned foreign debt, the company has triggered a large-scale cross-default situation, and the company "reminds investors to fully understand the risk factors disclosed by the company and pay attention to investment risks".
Bank of Xiamen filed a lawsuit
Also on the evening of February 18, Xiamen Bank also issued an announcement that its Fuzhou branch submitted a complaint to the Gulou District People's Court of Fuzhou City due to a financial contract dispute with Sunshine City's controlling shareholder, Sunshine Group, Sunshine Group's concerted action person Kangtian Industry, and Sunshine City's actual controller Lin Tengjiao, and recently the Fuzhou branch received a notice of acceptance from the court. The litigation involved an amount of approximately $365 million in the principal amount of the loan, as well as corresponding interest, penalty interest and compound interest.
According to the announcement, on June 7, 2021, Xiamen Bank Fuzhou Branch signed the Credit Line Agreement with Sunshine Group, agreeing to provide it with a credit line (principal) of 500 million yuan, and the scope of credit granting business includes working capital loans, bank acceptance drafts, and the issuance of domestic letters of credit. Subsequently, from June to September 2021, Fuzhou Branch successively released loans, silver bills, letters of credit and other lines totaling 559 million yuan. Sunshine Group and Kangtian Industry have successively provided a total of 111 million shares of Sunshine City shares as pledges, and Lin Tengjiao personally assumes joint and several guarantee liability for some debts.
At present, the above-mentioned borrowings of Xiamen Bank are more likely to be fierce and less auspicious, and the latest stock price of Sunshine City is 2.69 yuan / share, and the total market value of 111 million shares is about 300 million yuan, which is completely unable to cover the principal, not to mention interest and penalty interest. And Sunshine City is likely to add a new frozen share or passive reduction of shares.
As of February 18, 2022, Sunshine Group and its co-actors have been liquidated in the secondary market for a total of 146 million shares, accounting for 3.52% of the company's total share capital, due to the liquidation of some accounts. After the passive reduction, Sunshine Group and its co-actors held a total of 1.675 billion shares in Sunshine City, accounting for 40.46% of the total share capital of the company, of which 424 million shares were frozen, accounting for 25.02% of the company's shares held by it and 10.25% of the company's total share capital.
In response to the announcement of the Shenzhen Stock Exchange, Sunshine City said that at present, the above risk matters will not lead to a change in the control of the company, and there is no risk of instability of control. However, considering that the number of judicial freezes and passive reductions in shares of Sunshine Group and its co-actors continues to rise, the above risks cannot be ignored.
This article originated from China Fund News