Introduction: "On the one hand, the cost of 'counterfeiting' is too low, because the supervision of the Hong Kong Stock Exchange is not strong, so the trust in the financial report is very low, on the other hand, this part of the housing enterprises are in recent years, especially in the past three years, hundreds of billions of representatives, hiding a lot of foreign debt; the third is that many of the balance sheet foreign debt is collateralized by assets, the external environment is low, it is definitely the priority to repay the table foreign debt, credit debt is no cost (credit cost can be ignored in emergency), so it may choose to lie flat. ”
(Text/Zhang Yu Editor/Ma Yuanyuan) Debt seeking extension, chairman and president out-of-pocket "blood transfusion", and rumors of emergency suspension of trading of its property companies... Contemporary real estate is in the midst of a series of liquidity crises and credit crises.
On October 11, Modern Land announced that it seeks to extend the maturity date of the remaining part by three months after redeeming the 12.85% senior notes due October 25, 2021, to improve liquidity and cash management and avoid any potential repayment defaults.
And the "bad news curse" of contemporary real estate seems to continue. On October 12, Moody's downgraded The Modern Land' family business rating from B2 to Caa2 and the senior unsecured rating of its bonds from B3 to Caa3, and included the above ratings on the observation that further downgrades may be made.
However, the strange thing is that according to the 2021 semi-annual report of Modern Land, as of the end of June this year, the cash, restricted cash and bank balances of Modern Land were 17.425 billion yuan, and the cash and cash equivalents (bank balances and cash) in the consolidated cash flow statement were also 13.624 billion yuan. With cash on hand, why can't Modern Land repay even the $250 million senior notes on time?
On October 13, The Contemporary Property Response Observer Network said that Modern Real Estate has been actively responding to this process and responding to the challenge with the greatest sincerity and efforts.
Major shareholder borrows 800 million "blood transfusion"
It is reported that the above notes are THE US dollar bonds issued by Modern Land on April 25, 2019, with a maturity of 18 months and a coupon rate of 12.85%. As at the date of the announcement, the principal amount of the Company's issued notes totalled $250 million with a maturity date of October 25, 2021.
Contemporary Land solicited in the announcement to extend the maturity date to 25 January 2022, i.e. by an extension of 3 months. In addition, the Company will repay $87.5 million (35% of the outstanding principal) on October 25, 2021.
Hyundai Real Estate said it was seeking consent from non-U.S. note holders. Upon successful completion of the consent solicitation, a $1 consent fee will be paid to all holders for every $1,000 principal of the note. If calculated based on the total amount of US$250 million notes, after deducting US$87.5 million, the consent fee required for the US$162 million deferred notes of Modern Land Extension is US$162,000, which translates into about RMB 1,044,500.
"We want the entire industry to be healthy and stable, but reality tells us that the entire industry is indeed facing great challenges." The person in charge of the above-mentioned contemporary real estate said that the company's internal operations are currently proceeding normally, and the projects are promoted in accordance with the nodes for normal preparation and delivery, and all sales cases are sold normally.
It is worth mentioning that on the same day as the announcement of the extension, Modern Real Estate simultaneously issued a favorable announcement. Zhang Lei, Chairman of the Board of Directors, Executive Director and Controlling Shareholder of the Company, and Zhang Peng, President and Executive Director of the Company, intend to provide a shareholder loan of approximately RMB800 million to the Group, which is expected to be completed within the next 2 to 3 months.
A big question that makes the industry wonder is, in the case of the company's tight funds, where did zhang Lei and Zhang Peng provide shareholder loans to the group come from?
Interestingly, just a few days before the announcement, on 8 October, First Service, a property company under Contemporary Land, announced a short suspension of trading on the Hong Kong Stock Exchange from that date to await the publication of an announcement on the company's inside information in accordance with the Hong Kong Code on Takeovers and Mergers of Companies.
According to the information, First Service was listed on the Hong Kong Stock Exchange in October 2020, which was formed from the merger of The First Property and First Habitat under The Contemporary Land. According to the IPO prospectus previously disclosed by First Service, Zhang Lei and Zhang Peng have entered into a concerted action agreement, holding a total of 75.5% of the equity of First Service.
Based on the total market capitalization of Contemporary Land's current hk$1.216 billion (about 1.008 billion yuan), 75.5% of the equity is equivalent to about 761 million yuan. If the current valuation premium of the current property company is taken into account, the final consideration of the above equity is likely to exceed 800 million yuan.
It is not difficult to explain the words "acquisition and merger" mentioned by Modern Land in the announcement.
However, in response to various speculations in the industry about the possible sale of the first service, the above-mentioned person in charge of Contemporary Real Estate told the Observer Network: "All questions, please refer to the content of our group announcement, we believe that the company's arrangements have helped the real estate business to advance normally and steadily, which is good." Please don't believe any gossip, we are working together for this difficult time in the real estate industry. ”
A staggering $13 billion in cash and equivalents
For the announcement of the extension of Modern Real Estate, investors are somewhat surprised. Because according to the company's 2021 semi-annual report, as of the end of June 2021, the cash, restricted cash and bank balances of Modern Land were 17.425 billion yuan. The consolidated cash flow statement also had cash and cash equivalents (bank balances and cash) of $13.624 billion, and the unrestricted cash short-term debt ratio was 1.46, only stepping on a red line.
So, in the case of abundant cash flow, why should the bills of Modern Real Estate be postponed?
Jiang Kai, vice president of Zhonglian Zhi consulting, revealed to the observer network that this situation needs to look at the company's cash composition, if most of it is in the form of bank deposits, the probability is to put an account, "is a cash suddenly coming in at the end of the reporting period, going out on July 1, and this money is not a liability account." In fact, the real situation is not so much money, it is borrowed to flush the report. ”
Different businesses, the same unreasonable stories. In the case of sufficient cash flow on the announcement, the recent sudden announcement of the default of the notes has completely shattered the trust of investors. According to Jiang Kai, Fantasia frequently said that the company did not have liquidity problems before the maturity of the US dollar bonds on October 4, and even made it clear in communication with investors that the repayment funds had been in place and the funds had been transferred.
What is even more shocking to investors is that in this year's semi-annual report, Fantasia Holdings disclosed that the company currently has cash and equivalents of 27.177 billion yuan, and the cash-to-debt ratio has reached 1.59, while the defaulted US dollar debt is only 206 million US dollars, about 1.3 billion yuan.
This also makes investors put a big question mark in their minds about the authenticity of housing enterprise credit bonds and corporate announcements.
"On the one hand, the cost of 'counterfeiting' in the financial report is too low, because the supervision of the Hong Kong Stock Exchange is not strong, so the trust in the financial report is very low, on the other hand, this part of the housing enterprises are in recent years, especially in the past three years, the representative of the hundreds of billions, hiding a lot of foreign debt; the third is that many of the foreign debt on the table is collateralized by assets, and in the case of a low external environment, it is definitely a priority to repay the external debt of the table, and the credit debt is no cost (the credit cost can be ignored in an emergency), so it may choose to lie flat." Jiang Kai said.
At the same time, it is worth mentioning that Wind data shows that Modern Real Estate currently has a total of 8 existing US dollar bonds, if the extension is successful, there will be 4 US dollar bonds to be repaid next year, with coupon rates of 12.85%, 11.8%, 11.5% and 11.5% respectively.
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