① As of April 30, Aoyuan Group's accumulated principal amount of maturing debts involving unsettled payments was approximately RMB 41,727 billion, an increase of about 3.02% over the end of 2023. ② Aoyuan Group's 2023 annual report was issued and unable (rejected) to express an opinion.
Financial Services Association, May 14 (Editor Yang Bin) Today, Aoyuan Group Co., Ltd. (“Aoyuan Group” for short) announced that trading of 3 bonds including “20 Aoyuan 01” will resume trading on May 15, and 3 bonds have been suspended since the beginning of the year due to failure to complete small payments. Although both domestic and foreign debt restructuring has been completed, Aoyuan Group recently faced phased liquidity risks, which led to delays in settling some debts and project lawsuits.
According to the announcement, trading of “21 Aoyuan Bonds”, “20 Aoyuan 02”, and “20 Aoyuan 01” will resume trading from the opening of the market on May 15, 2024. Trading of the above 3 bonds has been suspended since January 2, 2024. During the suspension period, the company held a bondholders' meeting to deliberate and pass a bill granting further grace period arrangements for the above bonds, and completed partial payment of micropayments and accrued unpaid interest payments.
The total balance of the above three bonds was $5.54 billion. On January 2 of this year, Aoyuan Group stated that due to capital transfers and other reasons, the full amount of debt repayment funds has not yet been provided, and that it will ensure that the small bond payment obligation is completed as soon as possible within the grace period. According to the previous payment arrangement, Aoyuan Group should have paid 5% of the first micropayment and accrued interest before December 30, 2023.
The micropayment arrangement for the 3 bonds is that for each securities account registered as of the claim registration date (May 17, 2023), if the number of bonds held is less than 500, Aoyuan Group will pay the full amount on the payment date (December 30, 2023); if the number of bonds held exceeds 500, 500 will be paid on the payment date. Furthermore, 5% of unaccrued interest on the three bonds during their respective reference days totaled approximately $24 million.
Including the 3 bonds mentioned above, Aoyuan Group has a total of 8 domestic bonds with a size of 8.522 billion yuan. All 8 bonds have been extended beyond 2026.
Figure: Aoyuan Group maintains domestic debt
(Source: Choice data, compiled by the Financial Federation)
On January 12 of this year, China Aoyuan Group Co., Ltd. (“China Aoyuan”), the holding company of Aoyuan Group, announced on the Hong Kong Stock Exchange that the overseas debt restructuring progress plan was approved by the court. The restructuring officially came into effect on March 20, which means that in the past two years, Aoyuan's domestic and foreign debt restructuring has all been completed.
According to the latest restructuring plan, China Aoyuan will issue new financing instruments to replace the original foreign debt of about 6.1 billion US dollars, including 4 new debt instruments totaling 2.3 billion US dollars to 2031, as well as 1.4 billion common shares, 143 million US dollars of interest-free compulsory convertible bonds, and 1.6 billion US dollars of perpetual bonds.
Figure: US dollar bonds surviving after the restructuring of China's Aoyuan foreign debt
(Source: Enterprise Warning Pass, compiled by the Financial Association)
However, on the evening of May 13, Aoyuan Group revealed the latest information on the size of maturing debts that have not been settled. As of April 30, 2024, the company's accumulated principal amount of maturing debts involving unsettled payments was approximately RMB 41,727 billion, an increase of approximately 3.02% over the end of 2023.
Aoyuan Group and its subsidiaries are involved in a number of pending lawsuits. As of April 30, the amount involved was about $50.858 billion, of which the amount involved in financing-related lawsuits was about $44.577 billion and non-financing-related lawsuits amounted to about $6.281 billion. The total amount involved in the lawsuit decreased by about 9.04% from the end of 2023.
The company said that due to its own impact and the industry environment, Aoyuan Group recently experienced phased liquidity risks, which caused some debts to be settled in a timely manner and project lawsuits. The company is making every effort to advance the construction and elimination of various projects. At the same time, it is also coordinating fund-raising with all parties, actively communicating with various types of creditors, and seeking to reach a debt settlement plan to provide conditions for the company's sustainable operation in the future.
According to the 2023 annual report, Aoyuan Group's net profit attributable to owners of the parent company was -6.247 billion yuan, an increase in losses from 2022 to 3.550 billion yuan. Operating cash flow is -605 million yuan, compared to -508 million yuan in 2022. Aoyuan Group's net cash flow from operating activities has continued to be negative in the last 3 years, and the average net profit attributable to owners of the parent company in the last 3 years has been negative, which is an important adverse change in financial indicators in the credit risk management guidelines for the life of exchange corporate bonds.
Furthermore, Shinaga Zhonghe & Certified Public Accountants (Special General Partnership) audited Aoyuan Group's 2023 annual report on April 28 and was unable (rejected) to issue an opinion in the April 30 report.