On the last trading day of April, China South City (01668. HK) shares rose rapidly in the afternoon, rising more than 34% in late trading, the largest increase in recent times, and then retreated.
As of the close of Hong Kong stocks on April 30, the share price of China South City closed at HK$0.19, an increase of 18.01%, with a turnover of HK$88.8981 million, and the current total market value of the company is about HK$2.174 billion.
The rapid rise of the company's stock price naturally attracted the attention of investors, and many investors said that they were "too surprised" and gave questions about "what happened" on the Oriental Fortune stock bar. However, some investors believe that it is a "helpless move".
Titanium Media APP noticed that the night before (April 29), China South City had issued an "inside information" announcement, disclosing the latest progress of the company's overseas debt restructuring. According to the announcement, in order to further engage with overseas creditors and have a transparent dialogue on a comprehensive solution, China South City has appointed Ammann Financial Consultants Limited as financial adviser and Linklaters as legal adviser to assist the company in handling offshore debt restructuring matters.
In the announcement, China South City pointed out that the company believes that it should immediately explore a comprehensive solution to the current offshore debt situation for the benefit of all its stakeholders to ensure the company's sustainable operation and future development. The Company will treat all offshore creditors fairly and equitably, and will continue to communicate with offshore creditors to provide comprehensive solutions to alleviate the current liquidity problem.
At the beginning of 2024, China South City said that it did not expect to pay an interest on the "April 2024 Notes" due on February 12, 2024, and that the notes would default if the interest was not paid by March 13, and that the mandatory redemption payments for the "October 2024 Notes" due on February 9 were not expected to result in a default on the notes.
By March, China South City announced that due to the failure to pay the mandatory redemption money as scheduled, as of February 29, 2024, the total principal amount of the company's total borrowings had reached HK $25.329 billion, and there had been defaults or cross-defaults. In response to this situation, China South City is in discussions with creditors and noteholders on debt management strategies.
According to the announcement, the two notes involved are the 9% senior notes "April 2024 Notes" due in April 2024 and the "October 2024 Notes" senior notes due October 2024. The mandatory redemption proceeds and interest payments on the Notes are due on February 9, 2024 and February 12, 2024, respectively, in amounts of US$11,671,900 and US$12,997,800, respectively.
It is understood that at present, the largest shareholder of South China City is Shenzhen Special Economic Zone C&D Group, the second largest shareholder is Zheng Songxing, and the third largest shareholder is Tencent Holdings, with shareholding ratios of 29.278%, 20.159%, and 8.355% respectively. Among them, Shenzhen Special Economic Zone C&D Group has supported South China City through strong forces such as large stock subscriptions and syndicated loans, but it still has not recovered its overseas debts and is in a deep default dilemma.
In early February this year, China South City announced that it planned to sell at least 30.65% of Xi'an China South City, and up to 38.7%, and then planned to publicly sell about 50% of its stake in First Asia Pacific Property to ease cash flow pressure. However, there was no update on the two major asset sales in China South City, which led to the difficulty of implementing two interest payments and mandatory redemption payments in early to mid-February this year, thus triggering a storm of defaults.
At present, the development projects of South China City are all over Shenzhen, Nanchang, Nanning, Xi'an, Zhengzhou, Hefei, Chongqing, Harbin and other first- and second-tier core cities, and they are all large-scale industry-city complex projects.
In addition, according to the previous announcement of China South City, the company is expected to lose about HK $4 billion to HK $5 billion after tax in fiscal 2023. The expected loss was mainly attributable to the fair value loss of investment properties, impairment of receivables and other receivables assets, an increase in inventory impairment provisions, a fair value loss on financial assets and a decrease in lease income. (This article was first published on the Titanium Media APP, author: Chen Weina)