Attention: Taihe Intensively Communicated With Creditors To Realize Debt Restructuring Of Existing Projects

Once on the brink of death, Taihe is trying to grasp the last straw to survive.

On July 31, 2020, Taihe signed an agreement with Vanke. Vanke plans to invest 2.43 billion yuan in Taihe and hold 19.9% of the shares. This agreement will come into effect after Taihe formulates an effective debt restructuring plan. Although it did not directly intervene in the huge debt of Taihe, Vanke still won precious breathing time for Taihe after it helped.

Now it has been more than 5 months since the signing of this agreement. In these 160 days, the self-help operation of Taihe has been fully launched.

According to public information, in December last year, two debts of Taihe were extended, including a debt of 12 billion yuan from Great Wall assets, involving two projects of Taihe Shenzhen yard and Pingshan Taihe Central Plaza.

The reporter of 21st century economic report also learned exclusively that Taihe has already signed a memorandum with industrial bank on debt restructuring, and Dongfang asset, another important creditor, has reached an agreement on debt restructuring and has stepped into the project level. In addition, the communication between Taihe and other creditors is also in full swing.

In the project disposal, after reaching an agreement with creditors, Taihe proposed the method of "closed management", that is, the fund flow of financing and sales at the project level is completely used for the self operation of the project itself, and is not affected by the overall operation of the company.

In recent months, many projects under Taihe have been resumed and delivered, reflecting the achievements of self-help.

But the problem is not all solved. Prior to that, Sichuan trust took Taihe to court for default of 4 billion yuan of debt, indicating that the negotiation with creditors was not all smooth. And in 2021, Taihe still has a large amount of debt due.

This self-help operation has made the outside world see the dawn of solving the problem, but whether Taihe can finally reach the shore safely still needs further observation.

"Divide and rule" in debt restructuring

The self rescue action of Taihe can be roughly divided into three aspects: debt negotiation, asset disposal and internal control of the company. Among them, the solution of the debt problem is the top priority.

The 21st century economic reporter learned that as early as September 2020, Fujian provincial government departments had held a special meeting on solving the debt problem of Taihe. In addition to Taihe, some financial institutions attended the meeting. The government departments quoted the saying of "guarantee market subject" in "six stabilities and six guarantees" to coordinate all parties to reach a consensus.

It is reported that Taihe and Huang Qisen, chairman of Taihe Group, have always maintained communication frequency with government departments, including not only the relevant competent departments of Fujian Province, but also the district government departments of the city where the company's project is located.

Communication with financial institutions also maintained a high frequency. Huang Qisen once stayed in a hotel in Beijing's Financial Street to facilitate communication with financial institutions.

Judging from the progress of the matter, the intensive communication between Taihe and all parties has achieved certain results.

On December 18 and December 22, 2020, Taihe successively issued two announcements saying that it had reached a debt extension agreement with Minsheng Bank and Great Wall assets. The former involves a loan of 1.8 billion yuan, which is extended from December 20, 2020 to June 10, 2022, corresponding to Zhuhai Taihe Central Plaza project; the latter involves a loan of 12 billion yuan, which is extended from April 18, 2020 to December 18, 2023, corresponding to Shenzhen Yuanyuan and Pingshan Taihe Central Plaza.

In addition, some progress has not been disclosed. The reporter of 21st century economic report learned that industrial bank had signed a memorandum with Taihe on debt restructuring earlier, but the specific content was not detailed.

The reporter also learned from a project Department of Taihe Fuzhou that the project has signed a debt restructuring agreement with the asset management party Dongfang assets. After obtaining the fund supplement, the project has been resumed.

Although the overall debt disposal plan has not been launched, the debt restructuring of Taihe project has already started. It is not fully understood that after the debt restructuring, some projects of Taihe in Shanghai, Shenzhen, Fuzhou and other cities have involved creditors or partners.

According to an analysis by an investment bank to the 21st century economic reporter, Taihe's debt scale is relatively large, and its creditors are also relatively large, which are scattered in different projects. This "divide and rule" solution is more practical than a package solution. "Starting with a single project, it will help better quality projects run first, alleviate the problems of creditors and solve the concerns of buyers."

In addition, projects not affected by debt problems are also stepping up construction and sales.

In order to revitalize the project, after reaching an agreement with creditors, Taihe put forward the method of "closed management", that is, the capital flow of financing and sales at the project level is completely used for the self operation of the project itself, without being affected by the overall operation of the company.

After a number of self-help measures were launched, a number of projects under Taihe got the permission to start and sell again, and some of the projects' capital problems were alleviated and began to operate again. At present, Taihe's projects in Fuzhou, Nanchang, Taiyuan, Wuhan, Shanghai, Nanjing and other places have been restarted. In December 2020 alone, four projects have been delivered: Foshan yard, Hefei yard, Taicang yard and Shanghai yard.

The fate of diversified business is unknown

The disposal of existing assets is also one of Taihe's self-help measures. Among them, diversified business with long investment return cycle and occupying cash flow may become the focus of disposal in the future.

The diversified business of Taihe mainly covers the fields of medical treatment, education, insurance, cultural courtyard, etc. At present, Taihe courtyard line has been closed.

In November last year, news came out that Ping An insurance group of China and sunshine insurance group were bidding for Taihe's insurance subsidiary, with a valuation of more than $1 billion. According to the 21st century economic report, the reporter understands that Taihe does have a plan to sell this business, which is still under negotiation.

As for education and medical services, there is no latest news. Some analysts believe that in order to obtain cash flow, these diversified businesses may not be sold out, but the details still depend on the negotiation results between Taihe and creditors.

It is also understood that in order to control the cost, Taihe has carried out a round of personnel optimization within the company, but the proportion is not high, and the core management of Taihe has not changed.

In addition, due to the limited liquidity, the salaries of the headquarters, some regional companies and project companies have been suspended to varying degrees.

When will Vanke become a shareholder?

Although Taihe has made great efforts, the self rescue operation is far from over. According to the third quarter report in 2020, the overdue loan amount of Taihe is 48.710 billion yuan, and the interest that has not been paid is 6.476 billion yuan. Even if the extended part is included, Taihe still has more than 30 billion overdue debts.

As time goes on, the debt repayment pressure of Taihe will continue to increase. According to the announcement, Taihe will have more than 8 billion debts due in 2021. Including other debts, the amount of debt due this year will exceed 30 billion yuan.

In addition, the communication between Taihe and its creditors was not all smooth. On January 4, Taihe announced that Sichuan trust filed a lawsuit with Shanghai financial court for breach of 4 billion loans, demanding that Taihe repay the principal, interest and penalty interest of about 4.8 billion yuan. At the same time, Zhejiang Jinhui trust also sued Taihe for overdue loan of 700 million yuan.

Taihe has a large number of creditors, including trust, asset management company and bank. Among them, most banks provide long-term loans, and the short-term pressure on these debts is not big, and the negotiation process is the most smooth; the trust is mainly short-term loans, and the situation is urgent, which also urges Sichuan trust and Zhejiang Jinhui trust to take Taihe to court; the cooperation between asset management companies and Taihe is mainly at the project level, because of the actual situation of different projects, and different companies have their own private prosecution Therefore, the progress of negotiation is different.

The reporter of 21st century economic news learned that some creditors did not approve of the basic plan such as debt rollover, only hoped that Taihe could repay the principal and interest as soon as possible, and some creditors put forward other additional requirements, which also led to the negotiation between Taihe and some creditors was not smooth.

As for Vanke, after the signing of the agreement, Vanke has only made a public statement. On August 28, 2020, Zhu Jiusheng, President and chief executive officer of Vanke Group, said that whether Vanke could ultimately participate in Taihe depends on three elements: Taihe's desire for survival, the understanding of financial institutions, and the attitude and wisdom of government departments. Zhu Jiusheng also advised the creditors of Taihe to "sink the ship collectively or go ashore collectively".

The 21st century economic reporter also learned from several sources that Vanke had intervened in various degrees in previous negotiations and helped Taihe reach an agreement with some major creditors.

Bai Wenxi, vice president of China enterprise capital alliance, told the 21st century economic reporter that at present, creditors have not reached a consensus on the issue of Taihe, but adopt the attitude of "everyone sweeps the snow in front of their own door" to deal with it, which is very unfavorable for giving full play to the maximum value of Taihe Group's assets.

He said that although the debt restructuring and revitalization at the project level has pushed things forward to a certain extent, it is difficult to save Taihe as a whole. In contrast, the overall restructuring of the company can effectively solve the problem.

The aforementioned investment banks believe that Taihe has many creditors and different demands, so it is very difficult to reach an agreement in the short term. Promoting debt restructuring from the project level is a relatively pragmatic approach. However, this process may be relatively long, and Taihe may not be able to withstand such a wait.

He said that two of the three preconditions put forward by Vanke have been met, and only the problem of creditors has not been solved. Therefore, Vanke is likely to continue to participate in the following negotiations.

He believes that as for the real clarity of the matter, it will not be known until Vanke (possibly including a third party) really takes a stake. At that time, the addition of new shareholders will help Taihe solve the debt problem as a whole. However, to achieve this goal, all parties still need to work together.