Expected to trigger a cross default
[Epoch Times December 23, 2021](Epoch Times reporter Liu Yi comprehensive report) On December 22, the mainland real estate company Sony Holdings (Group) Co., Ltd. issued an announcement stating that the company was unable to pay a debt of USD 250 million. , Is expected to trigger a cross default.
Sony said in the announcement that the company currently does not expect to have sufficient financial resources to repay the principal and last interest of the January 2022 bonds. “Such payments are expected to be unpaid on the maturity date.”
The announcement also stated that in the event of failure to repay the payment on the maturity date and the June 2022 bond cross default, “if the holder chooses to accelerate the settlement according to the terms and conditions of the public offering bond, all public offering bonds may also expire immediately and Handle.”
The announcement stated that the shares and the company’s debt securities will continue to be suspended from trading on the Hong Kong Stock Exchange until further notice.
Reuters news on December 23 said that Sony Holdings has another USD bond with a coupon rate of 10.5%, with a scale of approximately US$200 million, which will mature on June 18, 2022.
Prior to this, Xinli Holdings had already overdue debt.
On September 30, Xinli Holdings issued an announcement stating that due to the unexpected liquidity problem caused by the macroeconomic conditions of the group recently, certain subsidiaries of the company failed to arrange two domestic financing arrangements in 2021 on or before the relevant expiry date. A total of RMB 38,742,081.00 of interest payable was paid on September 18, 2010 (“Overdue Payment”).
On September 20, Sony Holdings plummeted unilaterally, with the lowest point reaching a 90% drop. As of the close of the day, it had fallen by more than 87%. At 3:38 pm that day, the Sony Holding Group issued an announcement announcing the temporary suspension of trading. On that day, the company’s market value evaporated by approximately HK$12 billion.
On September 15, Fitch Ratings adjusted the long-term issuer default rating outlook of Sony Holdings from “stable” to “negative” and confirmed the rating as “B”. On September 21, Standard & Poor’s downgraded the long-term subject credit rating of Sony Holdings from “B” to “CCC+”, and at the same time included the rating on the negative credit watch list. Standard & Poor’s lowered its rating from CCC+ to CC on October 2.
In order to save itself, Xinli Holdings began to cut salaries, lay off employees, and sell assets.
According to the “21st Century Business Herald” in September, quoting sources from insiders of Sony Holdings, there are projects in Jiangsu in the Yangtze River Delta area of Sony Holdings that are in talks for sale, and projects in other parts of the mainland have been successfully sold and are undergoing handover procedures. The employees at the headquarters of the Sony Holding Company have successively received verbal notices of a 50% pay cut on September 15.
As for the reasons for the funding problems of Sony Holdings, an insider who disclosed the news to the “21st Century Business Herald” said: “Financial regulatory tightening and superimposed control policies have caused the collection to dry up. In addition, the company’s recent negative public opinion has led to a rapid tightening of financing. , The cash flow is difficult to support.”
After the Chinese Communist Party set three red lines for real estate companies in August last year to restrict the financing of real estate companies, most of the mainland real estate companies have problems with their capital chains, and the problem of capital rupture has been exposed this year. Large-scale real estate companies such as Evergrande, Carnival, and Kaisa have successively exposed. By default, the default of these real estate companies has exposed the high risks of high leverage, high debt, high turnover, and high financing costs in the mainland real estate market, which has aroused the attention of the international financial market.
Nomura Securities predicts that mainland real estate developers and their construction partners will continue to face increasingly serious financial challenges in the coming months.
Editor in charge: Li Qiong#
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