Shandong Ruyi Is Executed Again: It Can Not Afford 16 Million To Be Known As "China LV".

Frequent overseas acquisitions. China's largest industrial Apparel Group has been bumpy this year.

According to China's implementation of information disclosure network, in December 11, 2019, Shandong Ruyi Technology Group Co., Ltd. (referred to as "Shandong Ruyi group") added a new executor's information, the implementation of the target is 16 million yuan, the Executive Court is the Shandong Provincial Higher People's court.

China's implementation of information disclosure also shows that Shandong Ruyi has 6 implemented information in November and December.

Shandong Ruyi was once called "China's LVMH". In recent years, the company has been making overseas acquisitions frequently. In the three years since 2016, the textile manufacturer has acquired over 20 overseas assets, from Bulgarian woolen mill to several well-known luxury brands in London and Paris.

In 2018, Shandong became the top 20 fashion luxury group in the world with 27 subsidiaries, including 3 listed subsidiaries, namely Shenzhen Ruyi wool clothing group listed on the Shenzhen stock exchange, the Japanese apparel giant Rana Corporation listed on the Tokyo stock exchange, and the SMCP listed on the pan European exchange in Paris. By the end of the three quarter, the total assets of the company were 38 billion 134 million yuan, and the first three quarters of the total revenue was 29 billion 945 million yuan, with a net profit of 1 billion 276 million yuan.

With the implementation of the information, plus the $345 million offshore dollar bond repayments in December 19th, the rating agencies downgraded or revoked the rating, the pressure of Shandong's satisfaction is quite modest.

Wen Zhihong, an expert in chain consulting with Mr. Wang, told time finance that the reason why Shandong Ruyi was tight in recent years was mainly due to two reasons. First, most of the global mergers and acquisitions are mostly clothing brands, while Shandong Ruyi itself is good at fabrics and textiles, though it can form synergy between upstream and downstream, but the front end's brand operation and retail operation are not its core capabilities, resulting in the synergy effect not enough to enlarge to support its cash flow.

Wen Zhihong also said that another reason is that the acquisition of Shandong Ruyi is more of a downhill business or brand, and Shandong Ruyi does not have a good ability to integrate and digest, and has failed to help the acquired brand to make breakthroughs in the Chinese market.

Shandong Ruyi office and propaganda department all told time finance that the company was operating normally, and was not aware of the impact of information and capital flow and downgrading.

40 billion crazy acquisitions

Shandong Ruyi legal representative is Qiu Yafu, chairman of the board. Public network reported earlier that in 1975, Qiu Yafu, who was only 17 years old, entered the Jining wool textile mill (Shandong Ruyi predecessor) as an apprentice, from an ordinary worker through dispatchers, workshop directors and assistant factory directors to the luxury empire with assets exceeding 60 billion yuan. According to the textile guide, Shandong's total assets reached 62 billion 300 million yuan at the end of 2017.

Shandong's theme for nearly ten years is "buy, buy, buy". According to the mass net poster news report, the acquisition of overseas fashion and luxury goods companies in ten years made Shandong's Ruyi investment cash flow flow out of a total of 42 billion 470 million yuan.

In 2010, Shandong Ruyi purchased 41.18% of Japan's apparel giant Renna as its largest shareholder at a price of 4 billion yen. In 2013, Shandong Ruyi shares in Scotland tweed production enterprise Carloway; in 2014, Shandong Ruyi shares German men's suit production enterprise PeineGruppe. In 2016, Shandong ravaged 1 billion 300 million euros to acquire the controlling power of SMCP, a French luxury group.

Since 2017, the "Ruyi" major companies have accelerated the pace of mergers and acquisitions, buying 2 billion 600 million dollars for the comprehensive textiles and Polymer Co of Invista, including the world-renowned brand of LYCRA, and the 2 billion 200 million Hong Kong holding senior men's clothing brand Li Bang Holdings Limited, which bought 117 million British fashion company Aquascutum, and 600 million euros in 2018 to acquire the majority stake in Swiss leather company Bally.

A large number of acquisitions have made the "Shandong Ruyi" rise in popularity in the international arena, but the "face" under the management of no improvement and debt pressure has made it overwhelmed.

The acquisition of Japan's Rena continued to decline, revenue in 2011 fell 43.24% to 73 billion 300 million yen, the past few years revenue has not exceeded 80 billion yen mark, net profit has also been around the profit and loss line. According to Lian Shang network, it is also a decline. Li Bang men's clothing was bought after the acquisition, a large number of shops, factories, layoffs to control costs, in 2018 still showed net profit deficit.

Under the background of the domestic economic downturn and the "deleveraging", most of the enterprises actively expanding abroad are "sad". The Limited by Share Ltd, which is the first time in Gansu, has sold 230 million euros to Italy's 100 year old jewellery maker Buccellati, and the stock has also been ST. In 2018, Shandong and Shenzhen, competing for the Bally brand in Shenzhen, were also attacked by ST, whose radical transformation of fashion industry and acquisition in 2017 led to a huge debt crisis in the past year.

Shandong's Ruyi is also not optimistic.

　　 Become junk debt

In September 19th, the S & P global rating lowered Shandong's long-standing main credit rating from "B" to "B-", and reduced the debt rating of the company's secured unsecured bonds from "B-" to "CCC+". At the same time, all the above ratings should be included in the negative credit watch list. Moodie rating also lowered the rating of Shandong Ruyi family from B2 to B3 in October. At the same time, it lowered the B3 rating of senior unsecured notes issued by Sheng Mao Holdings Limited and Shandong Ruyi guarantee to Caa1.

You know, the S & P's CCC level and Moodie's Caa1 class are all bad bonds, which is known as junk bonds. Such bonds may default, or there are factors that threaten the security of principal and interest.

Moodie reported that as of the end of June, the cash held by Shandong Ruyi was 8 billion 900 million yuan, and the debt maturity in the next 12 months amounted to 12 billion 300 million yuan, while 4 billion 800 million yuan in notes payable and 100 million yuan in financial expenses. Existing capital can not cover capital expenditure.

In October 18th, Jining Urban Construction Investment Co., Ltd. (referred to as "Jining city investment") changed Shandong's Ruyi 26% stake at the price of 3 billion 500 million yuan and became its second largest shareholder. At the same time, Jining city voted to sign a guarantee agreement with Shandong, agreeing to guarantee the continued existence of the "15 voluntary debt" after the sale was completed in October 2019.

You know, "15 voluntary debt" is the annual interest rate of October 23rd. At present, the balance of the bond is 1 billion 903 million yuan. In the first 5 days of the payment date, Jining city investment and capital investment can be described as "timely rain".

According to the financial times, in December 6th, S & P withdrew its junk rating of the company after its share in Jining. It said that with the support of Jining city investment, Ruyi should be able to repay its bullet debt in December 2019. However, "in view of the time constraints, there are some risk of implementation."

It is interesting that Moodie recently lowered the rating of Shandong's Ruyi company from B3 to a deeper speculative level. Moodie said Shandong's debt repayment risk is high because it needs to solve a large number of debt that will soon expire. These maturities include the $345 million offshore dollar bond expired this month and the 4 billion 400 million yuan ($625 million) domestic debt due next year.

It is worth mentioning that, in addition to its own risk, Shandong's Ruyi also concealed the thunder that might explode. Li Yunfei, an analyst with Pacific Securities, said that although Shandong is willing to cope with its debt burden, it is also faced with the negative impact of other Shandong companies' default.

Dagong international credit rating Co., Ltd. previously gave Shandong Ruyi rating report, as at the end of 3 2019, the company's external guarantee balance was 1 billion 938 million yuan, a slight decline in the same ratio, the guarantee ratio of 6.58%, most of the secured enterprises provide mutual insurance private enterprises, there are certain risks. According to the latest letter of credit reporting provided by Ruyi Shandong's secured enterprises, Shandong's five voluntary companies have been repeatedly included in the Supreme Court's list of dishonest executors.