More than half a month after being filed for liquidation, Hope Education (Xijiao International Holdings, 1765. HK) has publicly responded to the latest developments in debt disposal. On the evening of April 14, Hope Education said in an announcement that it had made a preliminary plan for repaying the relevant bonds.
On March 27, Hope Education, a private higher education company with 24 colleges and nearly 300,000 students, was liquidated by a special group formed by some creditors due to a bond default.
As for the issue that the company mentioned in the previous report of Securities Times E Company has sufficient cash and cash equivalents, but may not be able to directly use the school's assets to repay debts, I hope that Education will confirm it in the announcement. The company said that the cash and cash equivalents it holds are operating funds for the purpose of the school and can only be used to operate the relevant school.
Questioned about malicious breach of contract?
Respond to malicious breaches
The defaulted bonds of Hope Education were issued by its subsidiaries in 2021 with a total amount of US$350 million and are guaranteed by Hope Education. Following the default of the bonds, on March 27, a special group of some of the bondholders filed a winding-up petition against Hope Education in the High Court of Hong Kong.
According to the Hope Education announcement, about $325 million of bondholders opted for redemption. Because the financial report previously disclosed by Hope Education shows that its funds are relatively sufficient, and the company has repeatedly stated that it has sufficient credit to repay the maturing bonds, the company's default is considered by some bondholders to be a malicious default.
One of the most controversial statistic is the cash assets held by companies. According to the latest financial report of Hope Education, as of August 31, 2023, the company's cash and bank balances totaled 2.928 billion yuan, except for 100 million yuan of pledged restricted deposits, the rest were cash and cash equivalents, which exceeded the total amount of the company's defaulted convertible bonds.
On the evening of April 14, Hope Education responded to this in an announcement. It said that the cash and cash equivalents held by the company as of August 31, 2023 are operating funds for the purpose of the school and are subject to regulations and restrictions, that is, the funds can only be used to operate the relevant school.
Hope Education also stated that the winding-up petition did not have a material adverse impact on the Group's financial performance, financial condition and business operations. The company's management is committed to ensuring that its schools continue to operate smoothly and that there are no financial hurdles to the normal operation of the schools.
In the past, most private higher education companies obtained economic benefits generated by their operating entities in the name of service fees and management consulting fees through contractual arrangements. For example, Hope Education indicated that through contractual arrangements, the company was able to control the consolidated subsidiary entities. The vast majority of the economic benefits generated by the business of the subsidiary consolidated entity are transferred to the company in the form of payment of service fees.
In this regard, a number of industry insiders said in an interview with a reporter from Securities Times E Company that the organizers of private colleges and universities cannot embezzle and embezzle school assets at will. The above response also confirms that Hope Education is limited by the relevant regulations in terms of using school operating funds.
Hope Education said that in addition to the bond default, the company is currently not involved in other default events, and domestic financial institutions still support the development of the school.
It said it had drawn up a preliminary debt repayment plan
For creditors, the biggest concern right now is how the company will repay its debts. It is understood that Hope Education previously proposed a plan to postpone debt repayment in communication with creditors, but it was not accepted by creditors.
In the announcement on April 14, Hope Education said that it had formulated a preliminary plan for the repayment of the relevant bonds. The Company will continue to communicate with bondholders to explore possible solutions.
However, in response to the company's above-mentioned response, on the evening of April 14, the above-mentioned special group of hope education bondholders told the reporter of Securities Times E Company that the company has not contacted them at present.
In the announcement, Hope Education also proposed three solutions. The first is to seek potential investors who may be interested in participating in the Company's fundraising activities (e.g. loans, borrowings, rights issues, open offers, placing of new shares and issuance of convertible bonds) in order to obtain working capital to repay and/or refinance the underlying bonds.
Other options include identifying potential investors to refinance the Petitioner's underlying bonds, liaising with the Petitioner on the debt restructuring plan, including amending the terms of the relevant terms such as the maturity and coupon rate of the relevant bonds.
Hope Education stated that it had engaged a professional financial adviser to evaluate the possible impact of the petition on the company's financial performance and financial position, and would assist in negotiating with the petitioner on a possible debt restructuring plan with a view to reaching a settlement of the petition. In addition, Hope Education is in the process of applying to the High Court of Hong Kong for an order of recognition in respect of the scheme.
In the announcement, Hope Education also expressed its views on the debt restructuring plan. The Company is of the view that it is in the best interests of creditors to agree to a debt restructuring plan and that a winding-up petition may jeopardize the long-term viability of the Company and adversely affect the recoverability of creditors. A reasonable debt restructuring plan will help restore the business and financial position, and protect the interests of creditors and all shareholders.
In this regard, the special group told the reporter of Securities Times E Company that it has been more than 90 days since the first lawyer's letter sent to the company by the creditor group on January 10, and more than 40 days since the formal default, and there is only the only face-to-face meeting on March 14, but there is no actual negotiation plan. It has been 18 days since it was brought into liquidation, and the company is still proposing a "preliminary" plan, which is puzzling.
On April 15, Hope Education fell more than 3% intraday and closed down 2.17%, with the company's latest market value of about HK $1.85 billion.
Questioned about malicious breach of contract?
Editor-in-charge: Wan Jianyi
Proofreading: Gao Yuan
The 2024 Securities Times "Looking for the 'Golden Eagle' of Venture Capital and Discovering the 'New Seedlings' of Enterprises" plan was grandly reopened, lighting up the dream of the times and blooming the light of the times.
Click on the poster to register, and quickly poke ↓↓↓
Questioned about malicious breach of contract?
Copyright Notice
All original content on the platforms of the Securities Times shall not be reproduced by any unit or individual without written authorization. Our company reserves the right to pursue the legal responsibility of relevant actors. For reprinting and cooperation, please contact the Securities Times assistant, WeChat ID: SecuritiesTimes
END
Questioned about malicious breach of contract?
Click on a keyword to view it
Periscope Series In-depth Report丨Stock Board Column丨Investment Xiaohongshu丨E Company Survey丨Times Meeting Room丨Top Ten Celebrity Private Equity Interview丨 The results of the questionnaire survey of economists in the first quarter are released丨Times Economic Eye丨Just now, Vanke announced!Respond to everything丨Respond to the line of fire!Implementing the new "National Nine Articles", a number of listed companies have spoken out丨Iran announced that the "attack is over"!Biden: Oppose any counterattack by Israel against Iran!China's statement丨Close-up丨Terminator Kazuo Ueda丨More than 250,000 people liquidated their positions within 24 hours!Bitcoin "flash crash" 丨 Suddenly! Iran launched a retaliatory attack! Claims to have successfully destroyed Israeli military targets丨The former film and entertainment giant went bankrupt! The actual controller was once the "richest man in Sichuan", and he cashed out more than 4 billion yuan in a crazy way 丨 Weekend blockbuster! The China Securities Regulatory Commission fully mobilized! Wu Qing spoke丨 A picture to understand: A quick overview of the new rules for listing and delisting
