Home » The assets to be sold in Fantasia must be paid off before 11‧4 in default of USD bonds | Evergrande | Debt Restructuring | Asset Restructuring

The assets to be sold in Fantasia must be paid off before 11‧4 in default of USD bonds | Evergrande | Debt Restructuring | Asset Restructuring

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At that time, all overseas US dollar debts will mature immediately if the default US dollar debts are not repaid

[Epoch Times October 15, 2021](Hong Kong Epoch Times reporter Winnie Comprehensive Report) Following Evergrande, the Chinese real estate developer Fantasia Holdings has attracted attention due to its substantial default of US$206 million in debt on October 4. According to the terms of cross-default, Fantasia has one month to correct the default, which means that Fantasia must repay the US dollar debt before November 4, otherwise all US dollar debt overseas will be due immediately.

On October 11, Fantasia Holdings confirmed that the company has established a “debt and asset restructuring team” and has appointed financial advisors and legal advisors to evaluate the capital structure and seek solutions. The company plans to sell assets to deal with short-term debts.

This company was founded by Zeng Baobao, the niece of former CCP national vice chairman and former CCP leader Jiang Zemin’s faction core figure Zeng Qinghong, and the incident caused a sensation both internationally and domestically.

On October 11, Fantasia Group issued two announcements. The first one was the announcement regarding the temporary suspension of trading in 18 Fantasia and 19 Fantasia 02 due to abnormal fluctuations. According to the announcement, on the morning of October 8, the two bond transactions of “18 Fantasia” and “19 Fantasia 02” experienced abnormal fluctuations. “18 Fantasia” fell 22.83% from the opening price, and “19 Fantasia 02” fell 54.19%. . Subsequently, the Shanghai Stock Exchange issued an announcement of a temporary suspension of trading.

The second item is the announcement on the “Solvency and Follow-up Arrangements.” The announcement stated that in response to short-term liquidity issues, Fantasia Holdings’ board of directors and management are evaluating the impact of the company’s financial and operating conditions, and with the support of local governments, financial institutions, financial consultants and other parties, they have established emergency teams and are formulating risks. Resolve the plan.

The announcement also stated that Fantasia Holdings has appointed Hualian (China) Co., Ltd. as its financial adviser and Sidley Law Firm as its legal adviser to assess the group’s capital structure, liquidity and seek feasible solutions. The company, Fantasia Holdings and/or related companies intend to sell assets to enhance short-term debt solvency.

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It is worth noting that Fantasia and Evergrande chose the same financial consultant Hualian for debt restructuring. After the mine exploded, Evergrande issued an announcement on September 14 stating that the board of directors had hired Hualian and Zhonggang Capital as their joint financial advisers.

Hualian is one of the world‘s largest financial advisory and debt issue consultants, mainly focusing on mergers and acquisitions and debt restructuring business, with a history of more than 40 years. Prior to this, Valian participated in many classic cases of debt restructuring, including the bankruptcy of Lehman Brothers in the 2008 financial crisis, and the bankruptcy and restructuring of General Motors and energy giant Enron.

According to a report by the China Securities Journal on October 11, Fantasia Holdings has confirmed rumors about the establishment of a “debt and asset restructuring team.”

Fantasia Holdings responded that in response to overseas liquidity issues, the company added a special “debt and asset restructuring team” to the real estate investment decision-making group and other decision-making committees to coordinate the group’s debt and asset restructuring work and resolve liquidity risks .

On the same day, Fantasia also issued a credit rating and bond trading mechanism adjustment announcement. The announcement stated that the outstanding US dollar debt of Fantasia Holdings Group will have a great negative impact on the company’s credit quality. China Credit Rating Agency China Chengxin International Credit Rating Co., Ltd. has adjusted the credit rating of Fantasia’s main body from “AA+” to “A”. “, Outlook remains “negative.”

At the same time, the credit ratings of “18 Fantasia”, “19 Fantasia”, “19 Fantasia 02”, “20 Fantasia 01” and “20 Fantasia 02” were adjusted from “AA+” to “A”. The credit rating of the debt is included on the watch list for possible downgrade.

Fantasia’s credit rating plummeted late at night

On the evening of October 4, Fantasia Holdings issued an announcement stating that the remaining outstanding principal of the senior notes due in 2021 with a total principal amount of US$500 million was US$205.6 million, and all outstanding principals were due on October 4. , But Fantasia Holdings failed to make the payment on that day.

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After the material default of Fantasia Holdings’ US$206 million bonds, Standard & Poor’s immediately downgraded the company’s long-term issuer credit rating from “CCC” to “SD” (selective default). The long-term issuance rating of secured notes was lowered from “CCC” to “D”, and the issuance rating of other senior unsecured notes was lowered from “CCC” to “CC” to reflect the high vulnerability of its ability to pay.

At the same time, Fitch downgraded Fantasia Holdings’ long-term foreign currency issuer default rating and senior unsecured rating from “B” to “CCC-“, while Moody’s downgraded Fantasia Holdings’ corporate family rating from “B3″ to ” Ca”, the outlook is “negative”, and its senior unsecured rating is downgraded from “Caa1” to “C”.

In addition to downgrading the rating, Standard & Poor’s also issued a “cross-default” warning on the credit status of Fantasia Holdings. Standard & Poor’s said that the principal default may trigger a cross default of Fantasia Holdings’ undue bonds and may accelerate the early payment of other debts of the company. According to the cross-default clauses, Fantasia has one month to correct the default, which means that Fantasia needs to repay the US dollar debt before November 4, otherwise all US dollar debts overseas will be due immediately.

“China Fund News” reported that there are currently 11 US dollar bonds in Fantasia, with a size of US$3.659 billion, of which US$1.35 billion will mature within one year, and there will be greater pressure on centralized redemption in the short term. In addition, the financing cost of its US dollar bonds is relatively high. Seven of the remaining bonds have coupons exceeding 10%, and the highest coupon rate is as high as 15%.

Analysis: Clean Jiangzeng action is deepening

After the Fantasia’s US dollar debt defaulted, the Chinese portal NetEase quoted an analysis article as saying that in terms of scale, the Fantasia of the US$206 million debt exploded is clearly not ranked, but from the perspective of the nature of the default and the social impact, this medium-sized real estate The company’s debt default will hit investors’ confidence no less than Evergrande Group.

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After the Fantasia was founded by Zeng Qinghong’s niece Zeng Baobao, the former vice chairman of the Communist Party of China and the core figure of the former party leader Jiang Zemin’s faction, the Chinese Communist Party’s official media continued to criticize Fantasia and Zeng Baobao. According to rough statistics, on October 11 alone, “China Economic Net” (www.ce.cn) published “Breaking Thunder at Night!” Six articles including Fantasia’s Sudden Debt Default, Zeng Baobao’s Family Letters and Fantasia’s Disappearing Cash, and “Fantasia: Proposing to Sell Assets to Enhance Short-term Solvency”.

Li Yanming, a Chinese expert and current political commentator, told The Epoch Times that China’s real estate industry is mostly the “white gloves” of the CCP’s dignitaries. It is an open secret to blend with the banking system and play the trick of “empty gloves and white wolves”. Before the Fantasia, Xu Jiayin, chairman of the board of directors of Evergrande, who was caught in a debt crisis, was closely related to Jiang Zemin and Zeng Qinghong Group, and had repeatedly confronted Xi Jinping in the economic and financial fields.

Li Yanming analyzed that Xi Jinping’s campaign to clean up the banking and real estate systems is deepening. After Xi Jinping cut off the bank’s capital chain, Evergrande and Fantasia successively broke out debt crises. At the same time, the Chinese Communist Party’s official media named Zeng Baobao Fantasia in a high-profile manner, proving that Xi Jinping has publicly pointed the finger at the Zeng Qinghong family.

Li Yanming said that before the 20th National Congress of the Communist Party of China, the high-level internal fighting has become fierce. Xi Jinping strictly guarded against the various coup attempts of the Jiangzeng Group. The Jiang faction in the fields of politics and law, finance, and cultural propaganda have become the key purging targets. He predicted that major events may happen in China at any time before the 20th National Congress of the Communist Party of China.

Editor in charge: Lian Shuhua#

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