The Dandong Port debt crisis has escalated again.
Yesterday, Dandong Port Group disclosed on the Shanghai Stock Exchange that the group was suspected of violating securities laws and regulations, and the CSRC has filed an investigation on it. Since 2017, the funds in Dandong Port have continued to be tight. Earlier, due to the debt chain breach, a debt default occurred. In addition, it was in arrears with Dandong Bank loans and disputes with Wanlian Securities. According to the data, the group will have a 2 billion yuan bond due next month.
Dandong Port was investigated by the Securities Regulatory Commission
According to the official website of the Shanghai Stock Exchange, Dandong Port Group announced that the company received the "Notice of Investigation" issued by the CSRC on July 20. The notice mentioned that because the Dandong Port Group was suspected of violating securities laws and regulations, the CSRC decided to investigate the case in accordance with the relevant provisions of the Securities Law of the People's Republic of China.
According to public information, Dandong Port Group is a seaport and service industry, mainly engaged in port warehousing, loading and unloading and transportation. The company was restructured from the original Dandong Port Authority in early 2005 and was jointly established by Dandong Port Authority, New York Port Development Corporation, Rosen Global Investment Corporation and Rilin Construction Group Co., Ltd. The company has jurisdiction over two port areas, Dadonggang and Langtougang. There are 28 production berths and the annual planned throughput capacity is over 100 million tons.
According to the data, the current Dandong Port Group has four bonds that have not yet expired, with a total amount of 5.55 billion yuan. They are:
15 Dandong Port PPN002: The value date is August 21, 2015 and will expire on August 21, 2018. The bond amount is 2 billion yuan and the coupon rate is 7.2%.
16 Dan Port 01: The value date is January 27, 2016 and will expire on January 27, 2021. The bond amount is 2 billion yuan and the coupon rate is 5.5%.
14 Dandong Port MTN001: The value date is October 30, 2014 and will expire on October 30, 2019. The bond amount is 1 billion yuan and the coupon rate is 5.86%.
16 Dan Port 02: The value date is November 25, 2016, and will expire on November 25, 2021. The bond amount is 550 million yuan and the coupon rate is 8.5%.
It can be seen that 16 Danang 01 will expire next month.
4 defaults within six monthsAsset-liability ratio is higher than industry level
Prior to this, Dandong Port was deeply mired in debt default. Four debt defaults occurred within half a year, and the bond default amount exceeded 3.4 billion yuan.
At the end of October last year, the first bond of Dandong Port Group defaulted. Dandong Port announced that “14 Dandong Port MTN001” had a substantial default due to failure to pay the principal on time, and the default amount was RMB 1 billion. According to the statistics of Xingye Research, the Dandong Port Bonds defaulted to the first corporate bond default in the port industry.
Due to the material breach of contract, United Credit Rating Co., Ltd. lowered the long-term credit rating of Dandong Port Group to C. According to the division of joint credit, the meaning of “C-level” is “not able to repay debt”.
With the outbreak of the “14 Dandong Port MTN001” bond default, the huge debt default risk behind the Dandong Port Group has gradually surfaced.
According to the Dandong Port Group's 2017 third quarter report, as of the end of September of that year, the company's total liabilities were 46.456 billion yuan, and current liabilities were 100.16 billion yuan, including short-term loans of 4.797 billion yuan, notes payable 2.1 billion yuan, and long-term loans of 15.068 billion yuan. The bonds payable were 6.01 billion yuan and the long-term payables were 13.599 billion yuan.
The asset-liability ratio of Dandong Port is also high. As of the end of the third quarter of last year, Dandong Port Group's total revenue was 4.863 billion yuan and net profit was 539 million yuan. In terms of assets, Dandong Port Group's total assets are 60.1 billion yuan, net assets are 13.7 billion yuan, and its asset-liability ratio is 77%, which is higher than Tianjin Port, Shanghai International Port, Yingkou Port and Dalian Port, which have the largest assets in the industry.
Under the pressure of funds, after the first bond defaulted, the Dandong Port bond default continued to ferment.
On December 1, 2017, Dandong Port Group disclosed to the holders of 15 Dandong Port PPN001 about the company's major assets and pledges as of October 31, 2017, interest-bearing debts, operating conditions and major litigation. According to the information, as of October 31, 2017, there were 6 Dandong Port Group stock bonds, totaling 6.95 billion yuan. The amount due in the first quarter of 2018 was 2.4 billion yuan, and the amount of bond redemption was large, and it also faced very large redemption pressure.
On January 16, 2018, Dandong Port Group announced that 15 Dandong Port PPN001 should pay interest and redeem the principal on January 13, and failed to raise sufficient repayment funds as of the announcement date, which constituted a substantial default and accumulated bond default amount of 15 100 million yuan.
On March 13, Dandong Port issued an announcement: due to the heavy interest of the company's interest-bearing debt, the short-term payment pressure is relatively high. As of the end of March 13, 2018, the company has not been able to follow the agreement to "15 Dandong Port MTN00I" "13 The principal and interest of Dandong Port MTNI are allocated to the custodian institution on time and in full.
It is worth mentioning that in addition to the risk of high asset-liability ratio, Dandong Port Group also has problems with related party transactions. At the end of 2017, the Liaoning Securities Regulatory Commission issued the "Decision on the Measures for the Issuance of Warning Letters to Dandong Port Group Co., Ltd." issued by the Liaoning Regulatory Authority on the official website:
Among the company's operating income, 24.82% of the revenue is the sales business between the company's wholly-owned subsidiary Liaoning Express Transportation Co., Ltd. (hereinafter referred to as the express delivery) and the related party Dandong Laodong Agriculture and Animal Husbandry Co., Ltd. (hereinafter referred to as the old Northeast). The amount of debits for other receivables in the Northeast and Northeast China was 4.813 billion yuan, of which sales receivables were 1.818 billion yuan. As of December 31, 2016, the balance of other receivables was 692 million yuan. In 2016, the amount of debits for other receivables in the old Northeast was 553 million yuan, and the balance as of December 31, 2016 was 112 million yuan. There is a loan between the company and the old northeast, and the company did not disclose it in the 2016 annual report.
Huge assets were seized and frozen
In the process of continuous fermentation of the “debt crisis” of Dandong Port Group, the bank that provided the credit to Dandong Port, the securities company that is the trustee of Dandong Port Bond and the Dandong Port Group have been in constant dispute.
In March of this year, Dandong Port Group issued a notice saying that Dandong Bank, one of the group's institutional creditors, had filed an arbitration request on February 7th in the Dandong Municipal Arbitration Commission, requesting the lifting of the comprehensive credit between Dandong Bank and Dandong Port Group. The Contract and the Liquidity Loan Contract, and announced that the loan has all expired. The arbitration application involves a principal amount of approximately 4.739 billion yuan, interest of approximately 106 million yuan, and recourse expenses of approximately 48.442 million yuan. The reason is that Dandong Bank believes that the Dandong Port Group's capital chain is broken and cannot fulfill its repayment obligations.
The Dandong Intermediate People's Court, after examination, found that the applicant's application for reviewing the legal requirements of Dandong Bank Co., Ltd. was ruled according to law: a total of 4.893 billion yuan of property was seized. 4.893 billion yuan is not a small amount for Dandong Bank. Dandong Bank's third quarter 2017 information disclosure report shows that as of the end of September 2017, the bank's total assets were 78.44 billion yuan, with a total profit of 743 million yuan.
Two months later, on May 23, the website of Shanghai Clearing House showed that the Dandong Port Group’s assets were sealed and sealed. The company announced that on May 21, 2018, the company received the “Civil Ruling Book” from the Liaoning Provincial Higher People’s Court. In the case of Wanlian Securities Co., Ltd. and the company's securities dispute, Wanlian Securities applied for property preservation to the Liaoning Provincial Higher People's Court on March 29, 2018. The court ruled that the company’s 2.69 billion yuan bank account deposits or the seizure of equivalent assets were frozen.
The announcement also stated that the above-mentioned asset seizure and freezing may further deteriorate the company's financing environment and adversely affect production and operation and solvency.