On July 4, Dunan Environment (SZ002011, stock price 12.47 yuan, market value 11.438 billion yuan) disclosed that the listed company has paid a total of 333 million yuan to related secured creditors on June 30, 2022.So far, the principal and interest of the loan involved in the related guarantee provided by Dunan Environment for Dunan Holdings have been fully paid off.Gree Electric Appliances (SZ000651, stock price 32.81 yuan, market value 194.1 billion yuan), which should have assumed the responsibility for repayment, said that due to the failure to reach an agreement on the above-mentioned 9.71% equity transfer plan, Gree Electric could not determine a specific related-party guaranteed debt repayment plan for the time being.However, Gree Electric also promised to take the final responsibility for the company's related guaranteed debts no later than October 31, 2022 according to the principles determined earlier.
In this regard, on July 5, DunAn Environment received a letter of concern from the Shenzhen Stock Exchange, requesting the company to explain the reason and rationality of first repaying the guaranteed debt promised by Gree Electric.In addition, the Shenzhen Stock Exchange’s letter of concern also pointed out another major question: Does DunAn Environment’s first compensation for the guaranteed debt promised by Gree Electric constitutes the occupation of non-operating funds by the controlling shareholder?
In 2018, a "liquidity crisis" broke out in Dunan Group. Since then, many listed companies under Dunan Holdings have also fallen into the dilemma of mutual insurance, including Dunan Environment.At the end of 2021, Gree Electric entered the Dunan environment, bringing a new turn for the listed company and attracting investors' attention.
Following Gree Electric, Zijin Mining (SH601899, stock price of 9.04 yuan, market value of 238 billion yuan) also intends to acquire a 9.71% stake in the listed company held by Dunan Holdings.However, Gree Electric did not seem to welcome Zijin Mining's stake in Dunan Environment, and launched a general offer to acquire the 9.71% stake in Dunan Environment held by Dunan Holdings.
DunAn Environment's "mutual insurance" debt history
On March 31, 2022, Dunan Precision, Dunan Holdings, Gree Electric Appliances, and Hangzhou Branch of China Zheshang Bank signed the "Special Agreement on Resolving Related Guarantees".
The agreement stipulates that, firstly, Dunan Holdings and Gree Electric Appliances shall respectively undertake 50% of the related-party guaranteed debts up to the maturity date of the financing (loan), and the related-party guaranteed debts from the financing (loan) maturity date include but are not limited to interest. , penalty interest and other new debts (if any) shall be repaid by Dunan Holdings on its own.Second, all parties should do their best to ensure that the related-party guaranteed debts should be repaid no later than May 15, 2022, and the guarantee obligations borne by DunAn Environment should be released.
As a former listed company of DunAn Holdings, DunAn Environment provided related guarantees for DunAn Holdings before.As of the maturity date of the financing (loan), the principal balance of the related guarantee is about 584 million yuan, and the interest is about 82.2595 million yuan, with a total of 666 million yuan.
The creditors of this part of the related guarantee have been disclosed in the announcement issued by Dunan Environment in December 2021. They are China Development Bank Zhejiang Branch, Bank of Communications Zhejiang Branch, and China Construction Investment Trust Co., Ltd.
Dunan Environment revealed that the balance of these several related guarantees was historically based on reasonable commercial purposes between the listed company and Dunan Holdings, and had been considered and approved by the company’s relevant board of directors and shareholders’ meetings. The directors have abstained from voting during the deliberation of the board of directors, the related shareholders have abstained from voting during the deliberation of the general meeting of shareholders, and the independent directors have expressed their independent opinions on the related guarantee matters, which is a continuation of the compliance guarantee in the company's history.
In September 2018, a syndicate of several banks provided Dunan Holdings with a syndicated loan of 15 billion yuan of working capital, which helped Dunan to fall.Behind the 15 billion funds provided by the syndicate, the chips pledged to specific financial institutions include a 29.48% stake in Dunan Environment.In November 2021, Gree Electric purchased this part of the equity for 2.190 billion yuan, and its equity transfer funds were also used to repay loans from relevant financial institutions.At the end of April 2022, after completing the transfer procedures, Gree Electric became the new controlling shareholder of DunAn Environment.
According to the agreement, the debt committee and its executive committee have promised to ensure that the secured creditors will not require Dunan Environment to actually perform the guarantee responsibility before this share transfer, and that Dunan Environment will not be required to Any actual loss incurred in the actual performance of the guarantee responsibility.
After the equity transfer is completed, the listed company faces the situation of being required to assume the responsibility of guarantee.
Will Gree pay off its associated debts?
333 million yuan!DunAn Environment paid the repayment to the connected secured creditor on June 30, 2022.
This also means that the loan principal and interest involved in the related guarantee provided by Dunan Environment for Dunan Holdings have been fully paid off, and the relevant creditors will release the company's guarantee obligations in the near future in accordance with internal procedures.
However, according to the previous announcement, according to the agreement, the money should be 50% of the related guaranteed debts that Gree Electric is responsible for paying off, and now Dunan Environment pays off on its own.
In 2021, DunAn Environment will realize a net profit of 405 million yuan attributable to shareholders of the listed company, and a net cash flow of 518 million yuan from operating activities.Now, it has paid 333 million yuan out of its own pocket, which accounts for 82% of the net profit attributable to shareholders of listed companies in 2021 and 64% of the net cash flow from operating activities.
Dunan Environment said that this move will cause short-term pressure on the company's cash flow and affect the company's financial statements in the first half of 2022, but it will have a positive impact on the company's continuing operations.
So, how much liability for related debts does Gree Electric have to bear?The originally promised 50% share seems to be full of variables before the 9.71% equity transfer of Gree Electric, Zijin Mining and Dunan Holdings is settled.
Gree Electric Appliances replied that since Gree Electric Appliances, Dunan Holdings and Zijin Mining Investment (Shanghai) Co., Ltd. have not reached an agreement on the transfer of the 9.71% shares of the listed company held by Dunan Holdings, the parties are still guaranteeing related debts. The repayment plan and the amount that Gree Electric will ultimately bear are further negotiated, so Gree Electric cannot determine the specific repayment plan for the time being.Gree Electric will sign a formal agreement with all relevant parties on the repayment plan, the compensation plan for the company and the follow-up recovery arrangement, and promises that no later than October 31, 2022, in accordance with the "Special Plan for Resolving Related Guarantees Matters". The principles determined in the Agreement shall bear the ultimate responsibility for the company's associated secured debts.
At the same time, Gree Electric said that in order to reduce the cash flow pressure after Dunan Environment repays the related guarantee debt, Gree Electric intends to provide loans to Dunan Environment by promoting Zhuhai Gree Group Finance Co., Ltd. Provide sufficient financial support for the company's development through non-public issuance and other methods, and promise to implement the compensation plan for the capital cost caused by Dunan Environment's repayment of the associated guaranteed debt when it assumes the ultimate responsibility for the related guarantee debt of DunAn Environment, so as to avoid the company any loss of profits.
Gree Electric and Zijin Mining, who are also interested in DunAn Environment, will finally reach an agreement?Can Zijin Mining successfully acquire Dunan Holdings' 9.71% stake in Dunan Environment?If successful, how much will Gree Electric and Zijin Mining each bear the 333 million yuan mutual insurance debt of DunAn Environment?On the afternoon of July 4, a reporter from "Daily Economic News" called Dunan Environment, but no response was received as of press time.
