On August 18th, Cailian Press (Reporter Lutingting) reported that the payment difficulties faced by the first national enterprise convertible bond default issue presents an opportunity. Lingnan Eco&Culture-Tourism (002717.SZ) announced on August 17th that China State-owned Assets Supervision and Administration Commission will acquire part of the 'Lingnan Convertible Bond,' and the rights and interests related to it. The maximum number of bonds to be acquired by individual holders is 1,000. The purchase price is 100.127 yuan per share, which exceeds the face value of the bond but is lower than the agreed-upon redemption price of 107 yuan per share (including the last interest payment).

Lingnan Eco&Culture-Tourism states that this bond acquisition is a partial acquisition for holders by a third-party subject and will not affect the assets and liabilities of the listed company or cause a cash outflow of the listed company, nor will it affect the company's debt repayment capability. The 'Lingnan Convertible Bond' stopped trading and conversions from shares to bonds before the maturity date due to the issuer's inability to pay off its debt and interest on time.

According to the announcement, as of the maturity date on August 14th, 2024, the remaining amount of the 'Lingnan Convertible Bond' is 456 million yuan. The issuer, Lingnan Eco&Culture-Tourism, cannot pay off its debt and interest on time with its existing monetary funds. The last closing price of the bond before expiration was 71.372 yuan, and its price has fluctuated down to 51.265 yuan during this year.

According to the preliminary acquisition plan, the acquisition object of China Talent Innovative Entrepreneurship Ecological Park Service Co., Ltd. will be the holders of the 'Lingnan Convertible Bond' at the closing on Aug 14th, 2024. The purchase price is calculated based on a 15% rise in the average closing price of the bond for 20 consecutive trading days up to August 9th, 2024, which is 100.127 yuan per share. As for the amount of the purchase, if the number of bonds held by the holders does not exceed 1,000, all the bonds they hold will be acquired; if it exceeds 1,000, the acquisition will be limited to 1,000 bonds.

For bond holders, if the calculation is based on 1,000 bonds, it means that parts of their 'Lingnan Convertible Bonds' worth more than 0.1 million yuan will not be included in this acquisition.

The announcement mentions that this significant matter is still in the planning stage, and there is significant uncertainty as to whether it can be carried out smoothly as expected. China Talent Innovative Entrepreneurship Ecological Park Service Co., Ltd. will subsequently claim debt rights to the company based on the acquired bonds, and there are no plans to undertake significant asset restructurings or apply for bankruptcy reorganizations of the listed company.

According to Tianyancha's equity penetration display, the actual controller of China Talent Innovative Entrepreneurship Ecological Park Service Co., Ltd. is the China State-owned Assets Supervision and Administration Commission of Zhongshan City. The actual controller of Lingnan Eco&Culture-Tourism is the Management Committee of Zhongshan Torch High-tech Industrial Development Zone, with the government of Zhongshan City behind it.

The main business of Lingnan Eco&Culture-Tourism includes ecological environment construction, water affairs and environmental governance, cultural tourism, etc. The company has been losing net income for two consecutive years and is expected to lose 0.2-0.25 billion yuan in the first half of 2024. Due to the impact of industry cyclical fluctuations and changes in the market supply and demand, government investment has been reduced, the company's optimization of business order structure and adjustments to its global strategy have not met expectations, the settlement cycle of the company's engineering business has lengthened, the collection of accounts receivable has been delayed, and the shortage of funds has limited the construction progress of the company's ongoing projects, which, together with the need to maintain daily operating expenses, have resulted in a high asset-liability ratio, a continuing decline in profitability and debt repayment capability, and liquidity pressure.

It is reported that two years ago, the Management Committee of Zhongshan Torch High-tech Industrial Development Zone acquired Lingnan Eco&Culture-Tourism by purchasing equity and entrusted voting rights. Data shows that in order to actively support Lingnan Eco&Culture-Tourism's relief efforts, the management committee has provided a total of 1 billion yuan in loans and 0.224 billion yuan in financing guarantees to Lingnan Eco&Culture-Tourism since its acquisition.

Lingnan Eco&Culture-Tourism states over the years, due to industry cyclical fluctuations and changes in the market supply and demand, government investment has been reduced. The company's optimization of business order structure and adjustments to its global strategy have not met expectations. The settlement cycle of the company's engineering business has lengthened, the collection of accounts receivable has been delayed, and the shortage of funds has limited the construction progress of the company's ongoing projects. Added to this, daily operating expenses still need to be maintained, resulting in a high asset-liability ratio, a continuing decline in profitability and debt repayment capability, and liquidity pressure.

As of the end of the first quarter of this year, Lingnan Eco&Culture-Tourism's asset-liability ratio was as high as 85.38%. In terms of the secondary market, on August 16th, Lingnan Eco&Culture-Tourism's closing price was 0.93 yuan per share. As of this day, it had been continuously trading below 1 yuan for three consecutive trading days and faced the risk of being delisted.