Taihe debt restructuring plan is confirming with all parties that Vanke's full adjustment is still in progress.

SMM: in response to the Shenzhen Stock Exchange's inquiry letter on its semi-annual report, Taihe Group (000732.SZ) replied on the evening of September 3, including the reasons for the substantial increase in advance payments, related party borrowing, debt restructuring and other related issues.

With regard to the closely watched progress of debt restructuring, Taihe replied, "up to now, the company's debt restructuring plan is being communicated and determined, and the company will form a comprehensive debt restructuring plan as soon as possible to protect the rights and interests of creditors and all parties in the company."

Since the beginning of this year, Taihe has failed to complete the timely payment of 17 Taihe MTN001, 18 Taihe 01, 17 Taihe MTN002, 17 Taihe 01 principal and interest. The company disclosed that as of August 15, 2020, the amount of loans due and outstanding was 34.9 billion yuan, and the outstanding interest was 4.332 billion yuan.

"A special group was set up within the company and designated special personnel to communicate with different types of creditors on their own initiative. Up to now, the company has made direct or indirect contact with creditors of all parties, launched various forms of online and offline communication, completed many rounds of communication, and the company will continue to understand the demands of creditors and promote the progress of debt restructuring through continuous negotiations. With a view to reaching a solution approved by the creditors as soon as possible and safeguarding the interests of the holders. " Taihe said.

Prior to this, Taihe introduced that the ways to repay the debt include sales rebate, realization of self-owned property projects, debt rollover and the introduction of war investment.

Considering that Taihe's sales performance was affected by the epidemic in the first half of this year, the total book value of realizable property is not high and the rental rate of some property projects is relatively low, it is obviously difficult for the first two ways to cover the debt that is centrally due. Debt rollover is to trade time for space, but it is also possible to increase the debt because of the accumulated interest. At present, we think that the success or failure of introducing war investment will be the key to whether the debt can be resolved in a relatively short period of time. " Haitong Securities researcher Jiang Chao said.

On the morning of July 31, Taihe Group announced that Huang Qisen, the actual controller of Taihe Investment and the company, signed a "share transfer Framework Agreement" with Hainan Wanyi Management Service Co., Ltd., a subsidiary of Vanke. Taihe Investment intends to transfer its 19.9% stake in the company to Hainan Wanyi. The total consideration for the transfer is about 2.43 billion yuan.

However, this share transfer framework agreement sets the prerequisites for share transfer, namely, the need for Taihe to formulate a debt restructuring plan and reach an agreement with creditors, which can support the company to return to normal business. Vanke has completed legal, financial and business due diligence on Taihe Investment and Taihe Group, and all parties have agreed on the solutions to the problems found in the due diligence and the proposed transaction.

So far, with regard to the progress of the work on the two prerequisites listed above, Taihe said that, first, the debt restructuring plan is being determined with the parties, and second, the due diligence of the company is being carried out by the Vanke team and the third-party professional organization team hired by Vanke, and the results of the due diligence have yet to be released after the work is completed.

At the Vanke interim performance meeting, when a reporter from the Financial Associated Press asked about the progress of its strategy to buy a stake in Taihe, Zhu Jiusheng, president of Vanke Group, said, "Taihe's problems are more about capital and financing, and its product strength and basic capacity are still very good. When Taihe is facing debt maturity, he has indeed found different institutions, including Vanke, to discuss how to do it. Even if Vanke can eventually become its second largest shareholder, it will only operate normally under the authority of the new board of directors, which may invite people from Vanke or from the society. people who have expertise in fund management, operation management and financing management. "

Zhu Jiusheng believes that the final success of Vanke's stake in Taihe depends on three factors: Taihe's own desire for survival; the attitude of financial institutions; and the response plan of Fujian provincial government and financial office.

"it can be seen that Taihe Group needs to deal with its own debt problems before it can be successfully introduced into Vanke. Vanke is not responsible for the company's operation and debt." Shi Xiaoshan of the Research and Development Department of China Securities Pengyuan rating pointed out.

By the end of June 2020, Taihe had a cumulative land reserve area of 13.0398 million square meters, with a total construction area of 32.7014 million square meters, and the remaining developable construction area of 9.5176 million square meters, of which the remaining development area of the Yangtze River Delta was 3.2285 million square meters, accounting for 33.9 percent. Fujian and Pearl River Delta regions accounted for 30.1% and 27.9% respectively, and Beijing-Tianjin-Hebei accounted for 12.6%.

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