The first time to admit that two debts are overdue, Xinli Holdings' liquidity crisis fermentation faces "life and death speed"

Source: Financial Associated Press

Financial Associated Press (Shanghai, reporter Wang Haichun) news, because of the stock price plunged and the attention of Xinli Holdings (02103. HK) for the first time responded externally to a number of market concerns.

Late on the night of September 30, Xinli Holdings issued an announcement saying that due to macroeconomic conditions, the company has recently faced unexpected liquidity problems, and some subsidiaries of Xinli Holdings have failed to arrange to pay interest payable on two domestic financings on September 18, 2021 on or before the relevant maturity date, with a total interest of about 38.74 million yuan, resulting in late payment.

"The Company is actively negotiating with the lenders concerned with a view to reaching agreement on the repayment arrangement. The lenders are not currently requesting expedited repayments or other coercive action. Xinli Holdings said.

On the afternoon of September 20, the share price of Xinli Holdings suddenly fell sharply, falling to a low of HK$0.37 per share during the session, a decline of more than 90%. From 3:38 p.m. onwards, Xinli Holdings suspended trading, and before the suspension, the stock price was HK$0.5 per share, a decline of 87.01%. On the same day, the total market value of Xinli Holdings evaporated by more than HK$12 billion, and the market value was only HK$1.785 billion. The company's shares have not yet resumed trading.

In this regard, Xinli Holdings admitted that the company's stock price fell on September 20, which may be attributed to the company's recent challenges and liquidity problems.

Xinli Holdings disclosed that on September 20, a foreign creditor of the company demanded that Xinli Holdings repay a previous financing, including the outstanding principal and accrued interest, in the amount of US$75.41 million (about 487 million yuan). The reason why the creditor made this claim was due to the technical reasons caused by Xinli's late payment.

The creditors also took further action, taking over the subsidiaries of Xinli Holdings and competing with Xinli Holdings for the subsidiaries.

It is understood that on September 24, the Company was informed by the aforementioned creditor that the creditor had appointed joint and individual receivers to certain overseas subsidiaries of Xinli Holdings in accordance with the beneficiary's mortgage arrangement, and that the directors of this subsidiary company had been replaced by directors nominated and appointed by the aforementioned creditors.

However, Xinli Holdings said that the subsidiary's business operations were not affected by the enforcement actions taken by creditors and were still controlled by the existing management team and retained its existing reporting mechanism. "Although the mandatory action may have a material adverse effect on the Company's business, prospects, financial condition and results of operations, it has not yet had a definitive consequence for the Group."

"The Company has engaged in dialogue with the creditor, receiver and newly appointed Directors to seek stability and expedite the implementation of agreed and value-preserving solutions to address the financial challenges currently facing the Group. The Company will also provide updates on the significant developments in the enforcement actions and dialogue. Xinli Holdings said.

When creditors competed for the project company, at the level of the company's equity, part of the company's equity held by Zhang Yuanlin, chairman of Xinli Holdings, was also forcibly liquidated.

It is understood that Zhang Yuanlin had previously mortgaged some of the shares he held and then carried out personal financing. Margin financing arrangements are established in the financing clause, such as the sale of mortgaged shares by creditors in the event of an event such as a stock price decline. The board of directors of Xinli Holdings was confirmed by Zhang Yuanlin that before the emergency suspension of trading of Xinli Holdings, about 149 million shares held by Zhang Yuanlin were forcibly sold by the relevant creditors to pay off the creditors. Zhang Yuanlin's shares, which were used for mortgage financing and forcibly liquidated, accounted for 4.17% of the total number of issued shares of Xinli Holdings.

According to public information, Xinli Holdings currently has three existing offshore dollar bonds, with a total size of 694 million US dollars. October 18 will be a key day for Xinli Holdings to face a big test, when a $250 million bond with a coupon of 9.5% will mature and face redemption.

"According to the current situation of Xinli, it is difficult to repay tens of millions of interest, and whether it can repay this bond is really sweaty." There are only two weeks or so between now and the maturity of the bond, and if it is not repaid, the crisis is likely to ferment further. For Xinli, this may have a vital stake in its future direction. These two weeks or so can be said to be the 'speed of life and death'. An analyst at a real estate agency in Shanghai told reporters.

An executive of a medium-sized real estate company in Shanghai also believes that "the most critical issue is how Xinli is in financial condition now, whether its cash flow is facing depletion, whether it can repay the notes due in October, and whether it will cause a chain reaction, further exacerbating the deterioration of the company's financial situation." ”

According to the surging news, Xinli Holdings failed to pay a development loan of about 100 million yuan for a project in Suzhou on September 27, which was advanced by the partner. The company is trying to sell its projects to ease liquidity tights.

And Xinli has launched an emergency self-help. Some market sources said that in order to solve the liquidity crisis, Xinli plans to sell its assets and Xinli property, and the receiver of Xinli Property may be Jinke. For this news, people close to Xinli told reporters that it is not clear that there is no information that can be released at present.

Xinli Holdings said in the announcement that the company's shares will continue to be suspended.