[Epoch Times September 20, 2021]China Huarong Asset Management Co., Ltd. (hereinafter referred to as “China Huarong”) has an interest-bearing debt of more than 1 trillion yuan (RMB, the same below), of which 650 billion is about to arrive Period, the leverage ratio is as high as 95.60%. On September 16, China Huarong issued a capital increase announcement at the Beijing Financial Equity Exchange, and publicly recruited restructuring investors.
According to Jiemian News, regarding the conditions for investors, the announcement stated that the minimum subscription size for investors should not be less than 100 million yuan, and investors need to make a one-time payment in cash and payment. China Huarong intends to issue additional shares with a nominal value of RMB 1 per share.
China Huarong also stated that the announcement of the capital increase project does not constitute an offer to prospective investors. In addition, the intended investor shall bear all the responsibilities and consequences arising from the capital increase process, and shall not claim to return the capital increase shares for any reason.
According to reports, a person familiar with the matter said that at present, institutions have started consulting and registration, but the intentional investors who meet the “investment party qualification requirements” in the announcement need to communicate with the supervision first, and then they can proceed with the next registration and other matters.
On August 30 this year, after a five-month delay, China Huarongyu released its 2020 annual report. The annual report showed that the company’s net profit attributable to the parent company lost 102.903 billion yuan, which shocked the market.
Regarding the cause of the loss, China Huarong attributed the main reason for the loss to the former chairman Lai Xiaomin. During his tenure, he had aggressive operations, disorderly expansion, and the market shock caused by the CCP virus (new crown pneumonia) epidemic. Lai Xiaomin was arrested in 2018 for corruption and bribery. In January this year, Lai Xiaomin was sentenced to death by the authorities.
The annual report shows that as of the end of 2020, China Huarong’s assets totaled 1,641.467 billion, total liabilities were 1,577,210 million, and the debt-to-asset ratio was as high as 96.09%. Among them, the net assets owned by the parent are only 18.2 billion yuan. As of the end of June 2021, China Huarong’s debt ratio has dropped slightly to 95.90%, which has not yet met regulatory requirements.
In terms of liability structure, as of the end of June 2021, China Huarong’s interest-bearing liabilities exceeded 1 trillion yuan, accounting for 69.29% of its total liabilities. Among them, bonds and bills payable totaled 285 billion yuan, a decrease of 15.4% from the same period last year; the balance of borrowings was 788 billion yuan, an increase of 0.5% from the end of the previous year.
The balance of bonds payable due within one year is 107.5 billion yuan, and the balance of loans due within one year is 577.9 billion yuan, totaling more than 680 billion yuan.
Data shows that China Huarong has a high proportion of interest-bearing liabilities. In 2020, interest paid on borrowings and bonds and bills was 24.534 billion yuan. In the first half of 2021, this part of payments reached 23.261 billion yuan.
In addition, China Huarong’s current borrowing amount that may trigger the immediate repayment clause is 17.9 billion yuan, which means that China Huarong cannot meet the requirements of financial or non-financial indicators stipulated in some bank loan agreements.
Editor in charge: Li Bing#
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