Herme Group Replied To The Letter Of Concern From The Shenzhen Stock Exchange: A Cash Gap Appeared In The Financial Sector.

More than a month after the letter sent by the Shenzhen Stock Exchange, the Herme group finally responded.

Herme group said that the financial sector appeared to pay the gap.

Herme group said that in the first half of 2018, the financing difficulty of the company increased, and the liquidity of the company was affected by the market environment to some extent. After the second half of the year, the financial strategy of the state had a callback. Although the company had been temporarily refunded without any loan, most of the loans due to banks and institutions had been extended.

The letter of concern from the Shenzhen stock exchange comes from the old Lai incident of HM group.

In December 5, 2018, the Beijing News reported exclusively, and became the focus of the market with easy access. However, Herme group has now been classified as a dishonest executor (commonly known as Lao LAI), and the Executive Court is the people's Court of Jiang'an District of Wuhan. The execution number is (2018) No. 9657, Hubei 0102 early Republic of China, case number (2018), Hubei 0102 holding No. 2624.

At that time, Herme group did not announce this announcement.

It was not until December 7, 2018 that Herme group announced the announcement.

It said that the above case is the case of the shareholder of Hanqiao Machinery Factory Limited, the controlling shareholder of the company, the Beijing first investment limited liability company and the Wuhan credit small loan Limited by Share Ltd financial loan contract dispute case.

Herme group: supervise and urge the first investment to coordinate with creditors as soon as possible.

In mid December 2018, the Shenzhen Stock Exchange issued a letter of concern to the Herme group (small board concern letter [2018] No. 414th), asking Herme group to explain five aspects, including: reasons why, why, the use and the reasons for not returning the loans to Wuhan in the first place.

On the evening of January 25, 2019, Herme group disclosed that the shareholders of Hanqiao machinery factory, the controlling shareholder of the company, invested in the first HCH investment based on capital demand, and signed an agreement with Wuhan small loan in February 2018. It agreed to provide credit for the first HCH investment from Wuhan small loan to RMB 350 million yuan, and the credit period was May 5th February 5, 2018 -2018.

The first investment is 100 million yuan.

The announcement said that since the Wuhan small loan guarantee measures were stricter, the first Hector investment did not continue to use the remaining part of the 350 million yuan credit line.

In May 5, 2018, the above liquidity loan expired.

In May 18, 2018, he invested $15 million in principal loan repayment. Because of the high proportion of collateral held by indirect holding companies and the difficulty of raising funds due to the influence of national policies, the liquidity of the first HCH investment fund tends to be tense, and the remaining funds can not fulfill the repayment obligation according to the contract period.

Herme group said that in December 5, 2018, the company was informed that it had been included in the list of dishonest executors by the people's Court of Jiang'an District of Wuhan.

After knowing the situation, the company immediately made public information inquiries through China's implementation of the information disclosure network, and verified it to the relevant parties, confirming that the company was a guarantor of the first investment and the small loan financial loan contract of Wuhan, and was jointly and severally liable for the reimbursement obligation and was not included in the list.

After knowing the foregoing, the company issued a letter of supervision to the first HCH investment, and urged the first investment to coordinate with the creditors to deal with the case as soon as possible, relieve the company's joint and several liability and cooperate with the creditors and the court to remove the list, so as to eliminate the adverse effects of the incident on the company.

The company has signed the strategic cooperation agreement with Gulfstream capital management (Zhuhai) Limited (hereinafter referred to as "Gulfstream capital") and plans to jointly lead the establishment of a rescue partnership, Herme group said.

The partnership will be a general partner from a powerful financial partner. The general partner will also provide a certain amount of relief funds for Herme group to solve the company's liquidity problems.

The first hex investment creditor, through the way of debt to equity swap, subscribe for the share of the partnership and become a limited partner of the partnership.

Creditors indirectly hold Herme group shares through partnership, and become shareholders of the company.

Herme group said it could effectively solve shareholder and corporate debt problems and optimize the structure of shareholders.

Up to now, there has been a preliminary cooperation intention between the fund side and many creditor institutions with Hanqiao machinery factory and Gulfstream capital.

Next, the company and its controlling shareholders will actively push ahead with the above plan. The first Hector investment will continue to negotiate with other creditors including small loans in Wuhan to eliminate the impact of overdue debts on the company.

The herm group said it had a cash gap in the loan sector.

Apart from Lao Lai, the problems of the Shenzhen Stock Exchange also include, "if your company is listed as a dishonest executor and so on, explain whether your company's current production and financing is normal and whether it has the ability of continuous operation".

Announcements show that in the commercial sector, the business sector of Herme group accounted for 65.93% of the half yearly operating revenue in 2018, which is the main business of the company.

At present, the businesses and receivable stores under the commercial sector are normal. The subsidiaries do not have assets and accounts frozen. They are in a normal state of operation. There are still some balances that can support the company to repay part of its debts.

In the production of electricity meter plate, Herme group electricity meter plate in 2018 half year revenue accounted for 11.12%.

As some creditors froze the capital account of the relevant subsidiary companies of the meter manufacturing sector, the company lost control of the relevant account funds, and the customers' funds could not be used to pay for the daily operation cost of the meter manufacturing section after they were reimbursement.

Up to now, the production capacity of the meter manufacturing sector and related subsidiaries is normal, and the important orders of key customers have been awarded in the second half of this year.

However, due to the current situation of tight funds, the procurement of raw materials needed for production is progressing slowly, and the pressure on delivery tasks on a regular basis will be greater.

In the financial sector, Herme group financial sector in 2018 half year revenue accounted for 22.89%.

Affected by the tightening of the P2P industry policy and market environment in the first half of 2018, the lending ability of the financial sector has dropped significantly, and the willingness to repay the loan customers has decreased, and the rate of bad debts has increased.

At present, there has been a cashing gap in the sector. The relevant subsidiaries of the financial sector have taken measures to strengthen the collection, improve the liquidity of loan funds, ensure the normal operation of the financial sector, and speed up the recovery of financing and lending capabilities.

Herme group said that in the first half of 2018, the banks and other financial institutions postponed the continuous credit operation of the stock loan after the impact of national policies, and the financing difficulty of the company increased. The liquidity of the company was affected by the market environment to a certain extent, which led to a serious loss of the financing ability of the company in the first half of the year. After the second half of the year, the national financial policy strategy had a callback. Although the company had been temporarily refunded without any loan, most of the loans due to banks and institutions had been successfully extended, and the company's bank financing capability was gradually recovering.