China Happiness issued a statement, the first disclosure of recent debt problems.
The statement said the overdue debt involved the amount of 5.255 billion yuan in principal and interest, but the company has only 800 million yuan in available funds. To this end, China Fortune established a financial institution creditors committee on February 1, and under the coordination of all parties, in order to resolve the problem.
It is also the first time that China Fortune has officially acknowledged overdue debt problems.
China Fortune’s overdue 5.255 billion yuan of debt involves bank loans, trust loans and other forms of debt, not bonds, debt financing instruments and other products, the announcement said. At present, the company is coordinating with the overdue financial institutions related to the rollover matters.
As for the reasons for the overdue debt, the announcement said that “due to the impact of multiple rounds of epidemas combined with the macroeconomic environment, industry environment and credit environment”, since the fourth quarter of 2020, the company needs to repay the financing principal and interest of 55.9 billion yuan due, and the net financing cash flow after excluding the support of major shareholders is -37.1 billion yuan. The company’s liquidity appeared “periodic tension”, resulting in the failure to repay part of the debt as scheduled.
According to the company’s disclosed data, as of January 31, 2021, China Fortune had a monetary fund balance of 23.6 billion yuan, of which only 800 million yuan was available, and the rest was restricted.
The statement also said the overdue debt ‘may have a certain impact on the company’s operations and financing,’ and that the company was working to coordinate efforts to actively raise funds, and had reached a consensus with some financial institutions on the extension. At the same time, with the strong support of the local government and the active coordination of the major shareholders, the company is developing a short, medium and long-term comprehensive solution plan. The company will firmly abide by the business philosophy of integrity, actively solve the current problems, and implement the main business responsibility.
In addition, the happiness of an ancient name for China financial institutions formed and the creditors’ committee meetings have been held for the first time, “therefore, the creditors should ensure that financial institutions to” no enforcement “as the basic premise, according to the market, under the rule of law, the principle of fair justice, classification ShiCe, err on the side of happiness of an ancient name for China to resolve the debt risk, maintain the legitimate rights and interests of creditors in accordance with the law.”
21st Century Business Herald has learned that the meeting was held on February 1. Apart from CFLD, heads of relevant departments in Hebei province and Langfang city, officials from the central bank and China Banking and Insurance Regulatory Commission, and representatives of financial institutions also attended the meeting. At the meeting, it was confirmed that Industrial and Commercial Bank of China (601398.SH) Hebei Branch and Ping An Asset Management jointly served as the chairman unit of the debt committee to organize discussions on debt risk resolution of China Fortune.
Wang Wenxue, chairman of China Fortune, summed up the crisis at the meeting:
Erroneous analysis of the situation of the ring Beijing, ring Beijing housing prices fell together, affecting the company’s collection of hundreds of billions of magnitude;
The effect of the new expansion area is not as expected;
Aggressive expansion, management is not fine;
China Fortune’s debt problems exploded in 2021. At the beginning of 2021, a number of agencies downgraded China Fortune, believing that the company’s operating performance and cash flow are poor, and it faces a large number of debt maturities. Affected by this, China Happiness’s bond prices fell sharply, a number of domestic bonds closed at a continuous new low. On the stock market, China Fortune’s shares closed at 9.25 yuan on Jan. 28, before trading was suspended, down about 40% from their December high.
The 21st Century Business Herald has learned that prior to the meeting, China Fortune had held a pre-communication call with creditors on January 29 to analyze the problems. The move comes after the Hebei provincial government brought in CICC and King & Wood Law Firm to conduct due diligence on China Fortune in late January.
According to the announcement, as of the end of the third quarter of 2020, China Happiness’s interest-bearing liabilities exceeded 200 billion yuan, including 59.7 billion yuan of non-current liabilities due within one year. However, during the same period, the Company’s ending cash and cash equivalents balance was approximately 36.7 billion yuan.
This is also the second time China Happiness fell into the financial chain crisis.
In 2017, Langfang, Zhangjiakou, Baoding and other places around Beijing issued “purchase restriction orders” one after another, resulting in a sharp drop in the property market around Beijing. Affected by this, the operating cash flow of ZhongCang Huan Beijing China Happiness turned from positive to negative, to -16.2 billion yuan, a decline of more than 300%.
In 2018, China Fortune transferred the equity of a number of projects around Beijing for the purpose of capital recovery. In July 2018 and February 2019, Ping An invested a total of 18 billion yuan in China Fortune twice and became the second largest shareholder with 25 percent of the shares. China’s happiness crisis finally temporarily relieved.
But affected by this, the vitality of Chinese happiness is badly hurt. In 2018, China Fortune’s sales reached a peak of 160 billion yuan. By 2019, it had dropped to 145.1 billion yuan, a drop of 11 percent. China Happiness has yet to disclose its 2020 sales, which have fallen to 96.3 billion yuan, according to third-party agency E-Creator. Not only did it fall out of the hundreds of millions, but the company’s ranking also dropped from its peak in the industry’s top ten to 47th place.
Reprint indicated source：Shine Trader Limited Live information