SME Private Debt Reappear Default Jiangsu Big Hong Textile Dilemma

Recently, some investors told the twenty-first Century economic report that the 13 big debts of small and medium enterprises' private debt issued by Jiangsu Da Hong Textile Group Limited by Share Ltd (hereinafter referred to as Tai Hong textile) in 2013 should have expired in April 19th this year, but investors have not yet received the principal and interest.

Investors say that there has been substantial breach of contract.

According to the distribution documents and rating reports obtained by our newspaper, the issuer of this issue is a private enterprise in Yancheng, Jiangsu, which is mainly engaged in cotton processing, spinning products, grey fabric manufacturing and textile machinery manufacturing business.

The underwriters are Qilu Securities. The issuing scale of the bonds is 300 million yuan, with a term of three years, and second years of investor's right to sell back.

The latest tracking rating report released by orient Kim, a rating agency in April 15th, lowered the credit rating of "13 macro bonds" to "CCC" and the original debt rating was AA-.

Dongjin Jincheng said that during the tracking period, the main business of Tai Hong textile was in a state of stagnation, and the cash flow generated by its normal operation had been unable to guarantee the timely repayment of principal and interest of the bonds.

Many bank loans have been overdue and the risk of default has increased.

The actual use of the "13 macro bonds" raised funds does not conform to the purpose of the funds disclosed in the prospectus.

The rating report also shows that Sheyang County Urban Investment and development limited liability company (hereinafter referred to as "Sheyang city investment") provides full unconditional and irrevocable joint guarantee insurance for the current bonds.

In addition, Sheyang city voted to provide mortgage guarantee for its land valued at 60 million 25 thousand yuan.

However, after the maturity of the bonds, the guarantor did not seem to offer compensation.

Investors said that the relevant parties of this issue will hold a "bondholders conference" on April 24th in Yancheng, Jiangsu, and jointly discuss the solution.

This reporter on the Qilu Securities is responsible for this period of bond underwriting responsible person, the person in charge said: "not authorized by the company, it is difficult to disclose."

It is reported that the issuer of this issue is a major textile enterprise in Yancheng, Jiangsu. The actual control is Zheng Zhihong, a private small and medium-sized enterprise.

As at the end of 9 2013, the company has Yancheng City Honghua Textile Machinery Co., Ltd. (hereinafter referred to as "Honghua textile machinery"), Yancheng City Guangdong Hong special chemical fiber Co., Ltd. (hereinafter referred to as "Guangdong Hong chemical fiber"), Yancheng City Hong Ming Da Textile Co., Ltd. (hereinafter referred to as "Hong Ming Da") and Sheyang County Rui Peng Linen Textile Co., Ltd. (hereinafter referred to as "Rui Peng linen") and other 4 subsidiary companies.

The issuance documents showed that as at the end of 2012, the total assets of Tai Hong textile amounted to 1 billion 461 million yuan, the total liabilities amounted to 744 million yuan, the owner's equity was 717 million yuan, and the 2012 year old company achieved 1 billion 317 million yuan in operating income and 110 million yuan in total profits.

However, the latest rating report of Dongfang Jincheng shows that as at the end of 9 in 2013, the total assets of Tai Hong textile department were 761 million yuan, nearly half that of the end of 2012, and the total profit realized in 2013 1~9 yuan was 19 million yuan, which was nearly 4 times lower than that in 2012.

As to why the issuer's assets have shrunk dramatically, investors said, "we have not verified whether the issuer has any financial fraud or pferred assets."

When the economic report was released in twenty-first Century, the telephone number of Da Hong textile was already empty, and the publisher was not available for comment.

According to the on-the-spot investigation of Orient Jin Cheng,

The main business has been in a state of stagnation, and the operating income in the tracking period has not been able to guarantee the repayment of principal and interest of the debt due to the cash flow generated by its normal operation.

At the same time, many bank loans have been overdue.

At the beginning of 2015, the Chellona Orient Asset Management Corp Jiangsu branch has bought three banks, such as ICBC, Agricultural Bank of China, and the Rural Commercial Bank of Sheyang, Jiangsu, to the company's overdue claims, totalling 246 million yuan, and is still in the process of debt restructuring and asset evaluation.

In the tracking rating report, it is also shown that the actual use of the "13 macro bonds" raised funds does not conform to the use of funds disclosed in the prospectus.

According to the prospectus, 162 million 800 thousand of the 300 million yuan raised is used to repay bank loans and the rest is used to supplement company liquidity.

However, according to the "supplementary agreement on capital use" signed by Da Hong textile and Sheyang city in May 3, 2013, in the 300 million yuan raised by the "13 macro bonds", the bond guarantor Sheyang city voted for 180 million yuan in the current period.

In this regard, the guarantor shot Yang City investment related people said, "this matter leaders in the settlement, I do not know the situation."

This is probably also true.

The most important reason for providing guarantee.

Investors disclosed that the guarantor Sheyang city voted did not deny the guarantee fact, but it did not seem to cooperate in compensation.

After the communication with the underwriter, the guarantor said: "it is willing to compensate the 180 million principal and interest that it uses, but the remaining 120 million principal and interest expect investors to give a grace period of 3 years."

But the same statement of investors is hard to get the confirmation of Sheyang city investment.

It is reported that the relevant parties of this issue will hold a "bondholders conference" on April 24th in Yancheng, Jiangsu, and jointly discuss the solution.

It is not yet clear whether the two sides can reach an agreement.

Investors told reporters in twenty-first Century that the bonds were

There are many brokerages, such as information management products, securities dealers' proprietary enterprises, private equity funds and so on.

At present, underwriters say they hope to negotiate with the issuer and the guarantor, and if they fail to negotiate, they will be resolved through legal means.

It is reported that Sheyang city voted prior to Sheyang county is an important infrastructure construction main body, Sheyang city investment is mainly engaged in Sheyang County Central urban land development and consolidation and infrastructure projects, and other businesses.

Public information shows that the legal representative before the city voted in Sheyang was Tian Wei you.

Tian, the former Sheyang county magistrate, was investigated in May 5, 2014 for alleged serious violation of laws and regulations.

According to the rating report, as of the end of 2013, the total assets of Sheyang City Investment Company amounted to 6 billion 68 million yuan, the owner's equity was 3 billion 420 million yuan, and the asset liability ratio was 43.63%. In 2013, the total revenue of Sheyang city investment was 610 million yuan, and the total profit was 140 million yuan.