Sunshine City", "life and death speed": Facing the pressure of 4 billion debt repayment in November

21st Century Business Herald reporter Tang Shaokui reported from Shanghai

At present, Sunshine City is racing against the clock to win the votes of investors.

Since the three quarterly reports suddenly two directors stationed by Taikang Department voted against it, last Friday (October 29) Sunshine City (000671. SZ) stock opened and stopped, and in the afternoon of the same day, Sunshine City held an emergency investor meeting to actively consult with investors on the first expiring trust ABS.

According to people familiar with the matter, Sunshine City hopes to reach a consensus with investors: first repay half, and the remaining half will be extended for one year. It is understood that at present, this plan has not yet been finally adopted, and the two sides are still trying to reach an agreement.

From October 30 to October 31, this weekend, Lin Tengjiao, chairman of the board of directors of Sunshine City, and Zhu Rongbin, executive chairman and president of Sunshine City, were not idle, and have been resolving the sudden debt run crisis.

On November 1, Sunshine City (000671. SZ) issued a debt reduction scheme to bondholders seeking an offer of exchange and a solicitation of consent.

It is understood that as one of the financing options, Sunshine City may liquidate the shares of Industrial Bank held in its hands and the realization of 4.8% of the equity exchanged with All Things Cloud.

As of now, there has been no substantial default event in the Sunshine City open market.

<h4>The debt reduction plan was released</h4>

On October 29, Sunshine City held its first bondholders' meeting, lin Tengjiao, together with Zhu Rongbin, Executive Vice President of Sunshine City, Wu Jianbin, CFO Chen Ni and other senior management teams participated in the meeting, the main content is to give a debt reduction plan for the "20 Sunshine Excellence" that will mature on November 8.

According to people familiar with the matter, Chen Ni, CFO of Sunshine City, proposed a debt reduction plan for debt holders, requesting that half of the amount be paid first, and the remaining half of the amount be extended for one year. The bond stock size is 1.27 billion yuan, plus interest, the size is 1.353 billion yuan.

Chen Ni pointed out that if the bondholders refuse to extend the maturity of the bond, it will be difficult for the company to redeem the bond on time.

As of press time, most bondholders have not raised too many objections to the plan, "the difficulty is great, there are still opportunities." People familiar with the matter said that at present, Sunshine City is still actively fighting for the final result. In recent days, Sunshine City related people and bond issuers have been working overtime.

21st Century Business Herald learned from a number of core sources that for the first ABS that is about to expire, Sunshine City is not unable to pay it all, but in the face of the overall debt scale in November, all the due accounts can be arranged in an orderly manner only through the negotiation of the extension period.

Through combing through public information, it was learned that the bond size faced by Sunshine City in November was about 4 billion yuan, including a trust ABS "20 Sunshine Excellence", with an issuance size of 1.27 billion yuan plus interest of 1.353 billion yuan; a supply chain financing of 499 million yuan, plus interest for a total of 517 million yuan; a US$247 million US dollar bond, plus interest conversion of a total of 1.734 billion yuan; a private debt of 636.5 million yuan, plus interest for a total of 674 million.

In addition, the query of the utility trust network shows that in November, Sunshine City has five more trusts that are about to expire, namely: Anshun No. 8 (Jingzhou Sunshine City Wenlan Mansion Project Phase I) Specific Asset Income Rights Collective Fund Trust Plan Phase II, Phase III and Phase IV; Zhixin No. 1151 Sunshine City Fuxingsheng Equity Investment Collective Fund Trust Plan Phase 1 and Phase 2. However, the total size of these five trust issuances is only about 130 million.

The 21st Century Business Herald reporter obtained a debt reduction plan issued by Sunshine City on November 1, showing that Sunshine City currently has 8 existing US dollar bonds, totaling about 2.2 billion US dollars.

Sunshine City hopes to reach an exchange offer with investors: "partial redemption + part of the newly issued bonds", the specific plan is as follows:

1. Initiate an exchange offer for a saleable USD bond due in February 2023 (with a saleable period of November 12, 2021) and three bonds due In January 2022 and March 2022, totaling US$747 million.

2. For every $1,000 USD, cash reimbursement is 2.5%.

3. 1:1 exchange of new and old bonds. The newly issued bonds, with a coupon rate of 10.25%, mature on September 15, 2022.

It can be seen that the debt reduction plan not only did not reduce the principal, but also increased the coupon rate, and the three bonds of the exchange offer were not rolled over for more than one year, and Lin Tengjiao made personal additional guarantees for these bonds. This shows that Sunshine City is actively striving for no default, just hoping to exchange more time to raise funds. At the same time, Sunshine City also said that for this debt reduction plan, the company has sufficient financial resources to repay the debt.

The plan, which requires the consent of more than 85% of bondholders, will be released on November 8. To expedite the move forward, Sunshine City amended the terms of the change for the eight bonds, giving holders a 0.5% consent request fee, and proposing that the new bonds be listed on the Singapore Exchange and pay cash consideration by November 23.

Compared to the fantasia year (01777. HK), Xinli (02103. HK), Modern Real Estate (01107. HK) and other housing enterprises before the "lying flat" performance, Sunshine City is still actively seeking the consent of investors.

<h4>Three quarterly reports of hidden crises</h4>

According to people familiar with the matter, Sunshine City has prepared debt repayment funds for "20 Sunshine Excellence" and "20 Huaji Construction ABN001 Priority", but if no money comes in, the DOLLAR bonds and private debt due in November will have no money to repay.

According to the data of the third quarterly report, the company's non-current liabilities due within one year were 17.15 billion yuan, down 34.06% from the end of last year, mainly due to the company's repayment of interest-bearing liabilities due.

According to the september operation situation released by Sunshine City, the company achieved a total sales amount of 153.907 billion yuan from January to September, an increase of 4.5% year-on-year; the sales area was 9.3863 million square meters.

Among them, Sunshine City achieved sales of 20.909 billion yuan in a single month in September, an increase of 11.3% year-on-year and 9.9% month-on-month. The data looks good.

This may also be the main reason why the two directors stationed by Taikang have questioned the third quarterly report.

According to the news revealed at the internal meeting of Sunshine City on October 30, the company's new financing sources are mainly two, one is the 240 million shares of Industrial Bank held by Lin Tengjiao, worth about 5 billion yuan can be pledged; the other is the 4.8% equity of Wanwuyun. In August this year, Sunshine City and Vanke gave a valuation of about 230 billion yuan to All Things Cloud when the equity was exchanged, and the corresponding valuation of 4.8% equity was about 10 billion. However, due to the fact that All Things Cloud is not listed and there is no fair valuation, the actual pledgeable value of All Things Cloud may have a large discount.

If the above two financing channels cannot be implemented, Sunshine City will still have a substantial default risk.

In the third quarter, Sunshine City's financial report data declined significantly: operating income of 11.400 billion yuan, a year-on-year decrease of 18.24%; net profit attributable to shareholders of 919 million yuan, 11.57% less than the same period last year; deduction of non-net profit loss of 1.752 billion yuan, a year-on-year decrease of 274.27%.

This is not a problem for the Sunshine City family. As the industry's leading housing enterprise, Vanke (000002. SZ) third quarterly non-net profit also showed a decline. The profit performance of small and medium-sized housing enterprises is even worse, such as the famous city (600094. SH) in the first three quarters of the deduction of non-net profit of about 169.5 billion, down 94.81% year-on-year; in the third quarter of this data was -297.8 billion, down 202.41% year-on-year.

At the moment when financing is tightening, housing enterprise bonds are more likely to have institutional runs. Suddenly in crisis, Sunshine City will not be the first.

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