Dongxu Optoelectronic Bond Default Puzzle: Holding 9.46 Billion Yuan But Not Paying 66 Million Interest

Holding a "huge sum of money" but unable to repay the interest of 66 million, Dongxu optoelectronic (000413. SZ) medium-term note defaulted again.

On November 17, Dongxu optoelectronics announced that the company's "2016 first phase of medium-term notes (variety 1)" "16 Dongxu photoelectric mtn001a" and "2016 first phase of medium-term notes (variety 2)" "16 Dongxu photoelectric mtn001b" should complete the bond interest payment on November 17. Due to the tight liquidity of the company, the company failed to pay the interest payable on the bonds on schedule.

Data show that the total issuing scale of the two varieties of Dongxu optoelectronics is 3 billion yuan. Excluding the exercise scale, the balance of variety 1 is 330 million yuan, and that of variety 2 is still 800 million yuan. The total amount of interest payable for the two varieties was 66 million yuan.

As for the default of bonds, Dongxu photoelectric said that the company is actively taking measures to strengthen its own operation, strive to improve its solvency, and actively negotiate with creditors to ensure the interests of bondholders to the greatest extent.

As a matter of fact, as early as November 2019, "16 Dongxu optoelectronics mtn001a" and "16 Dongxu optoelectronics mtn001b" failed to pay the interest payable and the relevant repurchase funds on time, and breached the contract. Now a year has passed, Dongxu photoelectric debt crisis continues to ferment.

Default on interest payment

After breaking the contract for the first time last year, Dongxu optoelectronics saved itself, but there are still many problems.

According to the report of the third quarter of this year, Dongxu optoelectronics achieved 4.583 billion yuan of revenue in the first three quarters, a year-on-year decrease of 63.53%. The net profit attributable to shareholders of the listed company was a loss of 1.214 billion yuan, including a loss of 318 million yuan in the third quarter.

Dongxu optoelectronics said that the main reason for the decline in revenue was the sharp decrease in high-end equipment and construction and installation engineering business orders due to the continuous shortage of working capital and the impact of the new crown epidemic.

However, Dongxu optoelectronics still has 9.46 billion yuan of monetary capital on its books in the third quarter of this year. However, with the advent of interest payment, it still can not afford the interest of 66 million yuan.

This is what happened this time last year.

At that time, the third quarter report of 2019 showed that the monetary capital of Dongxu optoelectronics exceeded 18.3 billion yuan during the reporting period, but "16 Dongxu photoelectric mtn001a" and "16 Dongxu photoelectric mtn001b" still failed to cash the interest payable and related repurchase funds on schedule.

About the Dongxu photoelectric money fund puzzle, Shenzhen Stock Exchange has asked the company many times in a row.

After breaking the contract last year, the Shenzhen Stock Exchange asked Dongxu optoelectronics to explain in detail the specific reasons why it failed to pay the interest for the repurchase of medium-term notes as scheduled under the condition that the company's book showed a large amount of monetary fund balance as of the third quarter of 2019.

After eight months of delay, Dongxu optoelectronics only replied to the Shenzhen Stock Exchange's inquiry in July this year.

According to the disclosure, as of November 15, 2019, the total monetary capital of Dongxu optoelectronics was 13.914 billion yuan, of which 255 million yuan could be withdrawn at any time to repay the principal and interest of the loan, and the total amount of restricted and special funds was 13.66 billion yuan. That is to say, although Dongxu optoelectronic's book currency funds are high, there are not many funds that can be used to repay debts.

According to Dongxu optoelectronics, at that time, the company needed to cash the repurchase and interest payment of the first phase of medium-term notes (varieties 1 and 2) in 2016, and specially proposed to the financial company to withdraw a total amount of 2.010 billion yuan, but was informed by the financial company that due to its temporary liquidity difficulties, it could not meet the company's demand for capital withdrawal.

This also leads to the risk transmission of financial companies to large enterprise groups. The liquidity problem of the financial company appears, which leads to Dongxu photoelectric's deposit in the financial company into restricted funds.

"Financial company is a platform for large enterprise groups to implement centralized management of funds, and the essence of related risks of financial companies is the extension of enterprise group risks in financial companies." According to an interview with the director of fixed income of a public offering fund in Beijing, "Dongxu group's debt has developed rapidly in recent years. After the outbreak of liquidity crisis, the risk of Dongxu group extends to financial companies, and the risks of financial companies also transmit to subordinate enterprises."

In fact, the phenomenon of "double high deposit and loan" of Dongxu optoelectronics has long been questioned by the market.

"We need to be vigilant against the risk of" high deposit and loan ". There are three main situations of" double high deposit and loan ". There are financial fraud, large amount of undisclosed restricted funds and serious funds occupied by major shareholders or related parties. In addition, enterprises with centralized management and control of group funds should also pay attention to their capital allocation ability. In essence, it is compliant, but once liquidity problems occur, it will lead to risk contagion, which requires a high level of capital allocation ability of enterprises. " Huaxi Securities chief fixed income analyst fan Xinjiang thinks.

The road of self rescue

Since the "16 Dongxu optoelectronics mtn001a" and "16 Dongxu optoelectronics mtn001b" defaulted, in May this year, "15 Dongxu debt" failed to be cashed on schedule, resulting in breach of contract.

According to the 21st century economic report, at that time, Dongxu optoelectronics signed an extension agreement with bond investors with 96.16% of the bond balance, which involved 919 million yuan of bond principal, but there were still 36.716 million yuan of bond principal that could not be negotiated with investors.

As far as Asahi is concerned, it has made great efforts to solve the problems of non main income and idle assets such as equity and idle assets. To carry out industrial investment cooperation with the local government industry investment platform which has the cooperation intention for the company in many fields, including "high-end cover glass production line project", "construction of new photoelectric display material industrial park project", "neutral borosilicate medical glass tube project" and increasing investment for the company's new energy source automobile industry.

In fact, in 2019, Dongxu group once said that the controlling shareholder planned to transfer part of the equity to Shijiazhuang SASAC, which was interpreted as a good thing for the state-owned assets owners.

However, the matter has not yet come to fruition. In September this year, Dongxu optoelectronics said in reply to investors' questions, "Dongxu optoelectronic Investment Co., Ltd., the controlling shareholder of Dongxu group, plans equity transfer with Shijiazhuang SASAC. Up to now, no substantial progress has been made in relevant matters. Dongxu optoelectronics investment and Shijiazhuang SASAC have not signed relevant equity transfer agreements."

From the group level, in June this year, dongxuqi star Holding Co., Ltd., a wholly-owned subsidiary of Dongxu group, announced in the Singapore stock exchange that the company should pay the outstanding principal and the accrued interest (coupon rate 7%) from December 13, 2019 to the "Dongxu group 7% n20200612" holder on June 12, totaling about $35397 million, but the company has not yet paid.

"There is no notification at this time and there is no restructuring news." On November 18, a bondholder of Dongxu group told 21st century economic news.

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