China Fund News reporter Nan Shen
On April 8, Shimao Group, which has been out of risk for two years, announced on the Hong Kong Stock Exchange that CCB (Asia) had filed a winding-up petition with the High Court of the Hong Kong Special Administrative Region, involving principal and interest debts of about HK $1,579.5 million. It is worth noting that the company just launched its long-awaited offshore debt restructuring plan on March 25.
The scheme gives creditors four options, of which even the "short-term vehicle" is up to six years, while the "long-term vehicle" is up to nine years. The debt-to-equity swap can be completed within one year, but it will be executed at the conversion price of HK$8.5 per share, and the company's latest stock price (about HK$0.405 per share) is less than 5% of the above conversion price.
An industry insider told reporters that CCB Asia, as a branch of CCB in Hong Kong, quickly proposed liquidation after the launch of Shimao's restructuring plan, which can be said to represent the attitude of mainstream financial institutions. Under the relevant Hong Kong law, any disposition of property by the company will be void after the commencement of a winding-up petition.
In early trading on April 8, Shimao Group's share price opened sharply lower, plummeting by more than 12% at one point, and its latest market value was less than HK$1.6 billion, about 99% lower than the peak of its share price in August 2020.
Sudden winding-up petition
According to Shimao Group's announcement, China Construction Bank (Asia) Corporation Limited ("CCB Asia") filed a winding-up petition against the Company with the High Court of the Hong Kong Special Administrative Region on 5 April 2024, involving financial obligations of approximately HK$1,579.5 million.
Pursuant to section 182 of the Companies Ordinance (Cap. 32), any disposition of a company's property after the commencement date of the winding-up (i.e. the date on which the petition is commenced), as well as any transfer of the company's shares, or change in the status of shareholders, will be void under Hong Kong law unless an order of recognition is obtained from the High Court.
Although it is a mainstream financial institution such as CCB Asia that has filed the winding-up petition, Shimao Group still stated in the announcement that "the Company believes that the petition does not represent the common interests of the Company's overseas creditors and other related parties." In order to protect the interests of its related parties, the Company will vigorously oppose the petition and continue to move forward with the offshore debt restructuring to maximize the value of its related parties. ”
Shimao Group also stated that "the Company encourages all foreign creditors to carefully consider the restructuring plan outlined in the Company's announcement dated March 25, 2024 and to support the implementation of the restructuring".
A restructuring plan has just been launched
Only 10 days after the announcement of the restructuring plan, the creditors immediately filed a winding-up petition.
According to the March 25 announcement, the company offers four options to foreign creditors: short-term vehicles, long-term vehicles, mandatory convertible bonds, and a combination of the above.
The short-term instrument is in the form of a short-term note or short-term loan, issued by Shimao Group with a maturity of 6 years, and the instrument can accommodate a total debt principal amount of up to US$3 billion. The short-term instrument pays interest only for the first four years, in cash or in kind, and the principal is repaid starting on the fourth anniversary of the effective date of the restructuring and being repaid on the sixth anniversary at an annual rate of approximately 33 per cent (34 per cent in the final year).
Long-term instruments are issued by Shimao Group in the form of long-term notes or long-term loans, with a maturity of 9 years, and the total principal amount that can be accommodated by long-term instruments cannot exceed US$4 billion. The long-term instrument is paid with interest only for the first six years, 3 per cent per annum, all in kind, and the principal is repaid in three years, 25 per cent, 37.5 per cent and 37.5 per cent respectively on the seventh anniversary of the effective date of the restructuring.
Mandatory convertible bonds are non-interest-bearing bonds with a conversion period of 1 year, with 25% convertible at the end of the 3rd, 6th, 9th and 12th months. Shimao Group's conversion price is HK$8.5 per share, and the company's latest share price is less than 5% of the above conversion price. Under this method, the company does not set a cap on the amount of debt that can be accommodated.
Option 4 is a combination of the above different instruments, which is a fixed combination of "25% short-term instrument + 35% long-term instrument + 40% mandatory convertible bond".
Sales in 2023 will be 42.8 billion yuan
On March 28, Shimao Group just released its 2023 annual results.
According to the performance report, the company's contracted sales in 2023 will be 42.822 billion yuan, the contracted sales area will be 2.947 million square meters, the turnover will be about 59.464 billion yuan, a decrease of about 5.7% from the previous year, the gross profit will be about 5.848 billion yuan, an increase of about 10.7% year-on-year, the gross profit margin will be 9.8%, the loss attributable to equity holders will be about 21.03 billion yuan, and the loss attributable to core business will be about 14.508 billion yuan.
As of the end of the Reporting Period, Shimao Group's net gearing ratio was approximately 473.2%, an increase from 2022, an asset-liability ratio of approximately 88.7% excluding advance receipts, and a cash-to-short-debt ratio of 0.04. The total repayment amount of bank loans, loans from other financial institutions and bonds owned by the company is about 263.96 billion yuan, of which 151.39 billion yuan is less than one year.
Shimao Group was once one of the leading real estate companies in China, and in 2020, before the accident, the company's contracted sales reached 300.3 billion yuan, ranking eighth in the industry.
In the first two months of 2024, Shimao Group's cumulative contracted sales totaled approximately RMB4.35 billion, with a cumulative contracted sales area of 321,600 square meters and an average selling price of RMB13,520 per square meter. In the same period of 2023, the above data will be 8.62 billion yuan, 561,800 square meters and 15,348 yuan respectively.
Editor: Xiao Mo
Review: Chen Siyang