Oriental Garden (002310): Proposed non-public offering of 3 billion preferred shares of controlling shareholders to provide liquidity support to promote financial structure optimization
Events: 1. The company announced that the seventh session of the board of directors elected the “Summary of Amendments to the Plan for the Non-public Issuance of Preference Shares in 2018”, “About Substitution” and related documents.
The company intends to partially modify the plan for the non-public issuance of preferred shares and announce the latest plan.
According to the latest plan, the company intends to non-publicly issue no more than 30 million preferred shares, and the total amount of funds raised does not exceed US $ 3 billion. The fixed distribution rate of the parcel distribution for a single hop arrangement, rather than the net amount after the issuance fee, does not exceedUS $ 2.5 billion in repayment of loans to financial institutions and redemption of bonds due, not more than US $ 500 million to replenish liquidity.
At the same time, the company and Everbright Jinye Assets, a subsidiary of China Everbright Group, signed a “Conditional Preferred Subscription Subscription Agreement”. Everbright Jinye has decided to subscribe to no more than 500 million with its own funds. If a fund or a joint third party is established, the total subscription will not exceed 250.Billion.
2. At the same time, the company announced that shareholders and shareholders intend to provide liquidity support such as credit enhancement and entrusted loans to the company. This transaction is a related party transaction. The main contents are: (1) Shareholders’ equity or entrusted loans: the contract, budget, and transaction amount are used as the transaction amount., The annualized interest rate of shareholders’ equity or entrusted loans is not higher than 5.
655% (inclusive); (2) Acceptance of guarantees: the company and its subsidiaries accept the controlling shareholders to provide guarantees for the company’s financing, bond issuance, etc., and the total amount of guarantee fees payable in the contract, the annual guarantee fee rate is not higher thanGuarantee amount of 0.
The company expects that the scale of connected transactions with controlling shareholders will not exceed 3 in 2020.
Comment 1. The issuance of preferred shares will effectively reduce the asset-liability ratio, optimize the financial structure, enhance continuous financing capabilities, enhance liquidity, and ensure that the capital requirements for business operations continue until the end of September 2019, and the company’s assets and liabilities will decrease.
3%, assuming a preferred issue size of US $ 3 billion, if the financial data at the end of September is used as the base, the company ‘s asset-liability ratio will be reduced to 64 after the issue of the preferred shares is completed and debts are repaid.
The company’s current debt financing period is more than expected within 5 years. As of the end of September 2019, the company’s short-term debt balance was about 37.
6 ppm, the balance of other current debt (mainly short-term bonds payable) is about 15.
800 million, long-term borrowing surplus of 23.
400 million, the balance of bonds payable is 22.
900 million; repayment of company debts with relatively long maturities through the issuance of long-term preferred stocks can optimize the company’s capital structure, reduce reliance on short-term debt financing, and effectively enhance the company’s multi-channel approach beyond traditional bank loans and bondsFinancing capacity.
At the same time, the funds raised in this offering will not exceed US $ 5 million to supplement working capital, and will jointly provide a strong financial guarantee for the company’s business development.
Everbright Group’s assets under Everbright Group intend to subscribe to less than 500 million with its own funds. If a fund or a joint third party is established, the total subscription will be no more than 2.5 billion, which will help the company’s preferred shares to be issued smoothly and also reflect the market’s priority for the companyRecognition of issue of shares.
2. The controlling shareholder provides liquidity support such as credit enhancement and entrusted loans, which will effectively enhance liquidity and help rapid recovery of performance. The controlling shareholder’s liquidity support to the company is mainly provided through shareholder loans or entrusted loans, and credit enhancement.The transaction is a related party transaction. The company expects that the total number of related party transactions of the controlling shareholder will not exceed 3 in 2020.
According to the company’s announcement, the shareholder’s benefit provided by the controlling shareholder to the company or the entrusted loan support is based on the contracted solution as the transaction amount, and the annualized interest rate of the shareholder’s loan or entrusted loan does not exceed 5.
655% 天津夜网 (inclusive); to provide the company with guarantees and the contractually agreed guarantee costs and transaction costs, the annual guarantee fee rate shall not exceed 0 of the guarantee amount.
5% (inclusive); if the total amount is assumed to be 3.
Of the 500 million yuan, the interest and guarantee fees payable on entrusted loans were 3 respectively.
0 billion and 0.
500 million US dollars, which can be estimated to correspond to US $ 5.3 billion in loans and US $ 10 billion in secured financing; if it is assumed that the entrusted loan should respond to interest and guarantee fees, it will be 2.
500 million and 1.
0 million, it can be calculated corresponding to 35.
$ 400 million in loans and $ 20 billion in secured financing.
The controlling shareholder’s support for the company’s liquidity will further expand the company’s financing channels, reduce financial costs, improve financing efficiency, better support the company’s business development, and help the company’s performance recover quickly.
3. The inflection point of the fourth quarter performance has been reached, and the driving force for the rapid recovery of future performance has been enhanced. According to our recent research, the company’s debt crisis and liquidity crisis have been basically eliminated, the company’s on-hand projects are effectively organized, and historical operating risks are better released.The company’s expected substantial growth in the third quarter of 19, rapid recovery of revenue, and the company’s operations have shown significant marginal improvement; the company’s third quarterly report estimates that the net profit attributable to the parent for 2019 will be -3.
0 trillion, the inflection point of the fourth quarter performance has been reached; and Chaoyang state-owned assets and the election of the board of directors have successfully landed at the end of October 2019. The synergies in financing, business and other aspects between the two parties will gradually emerge, and historical operating risks will be continuously eliminated, Promote the smooth implementation of engineering projects in hand and the rapid recovery of hazardous waste business operations, expand the smooth issuance of future preferred shares and the release of liquidity support from the controlling shareholder, and the driving force for the rapid recovery of company performance has been enhanced.
4. The risk reminder supplements the project, the project progress is not up to expectations; preferred shares are not successfully issued eventually; financial expenses can be effectively reduced, which erodes net profit; and systemic risks in the broader market.