Modern Land, which claimed to have made significant progress in overseas debt restructuring, put its green building business on the shelves.
On the morning of June 6, Contemporary Real Estate disclosed to the public that it planned to sell the entire equity of Beijing Contemporary Green Construction Project Management Group Co., Ltd. (hereinafter referred to as "Dangdai Green Construction"), and the net proceeds will be used as the company's working capital.
About a week ago, the company received permission from the Grand Court of the Cayman Islands to hold a meeting of creditors on June 29.It bluntly stated that under the circumstance that the court process is smooth, the company will complete the restructuring of overseas debts in the next few months and fully relieve the default situation of overseas high-interest debts.
Since the default of the US dollar debt in October last year, Modern Land has been on the road of debt reduction.Now that overseas debt has made substantial progress, the shadow over the top 100 real estate company seems to be finally showing signs of dissipating. On the morning of June 6, Contemporary Real Estate announced that the indirect wholly-owned subsidiary of the company has entered into an agreement with the buyer to sell the entire equity of Contemporary Green Construction at a price of 49.4738 million yuan
. According to public information, Contemporary Green Construction was established on April 18, 2016, mainly engaged in construction project management, engineering consulting and engineering technology consulting.The company has two branches, namely Beijing Dangdai Green Building Technology Group Co., Ltd. Xi'an Branch and Beijing Dangdai Green Building Engineering Project Management Group Co., Ltd. Hebei Branch, and it has also invested in 10 companies, including 8 and Affiliated companies and 2 non-consolidated companies. Although established for several years, the value created by contemporary green building is very limited.During 2020 and 2021, the company and its subsidiaries and branches realized unaudited profits after taxation and non-recurring items of 4.449 million yuan and -21.406 million yuan respectively. The unaudited consolidated net asset value as of the end of March this year About 89.725 million yuan. Based on this calculation, the transaction consideration is equivalent to 55% of the target company's net asset value.In addition to selling at a discount, the payment process formulated by all parties also insures the buyer to a certain extent.
According to the content of the agreement, the transaction amount involved will be paid in three installments, of which the payment of the third installment will depend on the operating conditions of the target company, that is, within 21 months from March 31, 2022, the target company's cash flow The net amount should be no less than 70.6768 million yuan. If the evaluation target is achieved, the buyer will pay the third installment of 24.7369 million yuan within 5 working days.
If 70% of the agreed cumulative net cash flow target is not reached, the buyer is not required to pay the third instalment; if 70% is reached but not 100%, the buyer is only required to pay 50% of the third instalment.
At the same time, when paying each installment to the seller, the buyer has the right to deduct the debts, expenses, liquidated damages, compensation, etc. payable by the seller from the payment.
Due to the waiver of some accounts receivable in the transaction, Modern Land obtained a debt forgiveness income of about 41.951 million yuan.Superimposed on the equity transfer, the transaction is expected to confirm an unaudited total accounting income of approximately RMB 67 million to RMB 91.7 million, and the net proceeds will be used as the group's working capital.
The "International Finance News" reporter noticed that the buyer who cautiously took over the green building business of Contemporary Real Estate was Tengyun Zhuke Real Estate Co., Ltd. (hereinafter referred to as "Tengyun Zhuke Real Estate"), which was established in December 2020. On the 16th, with a registered capital of 100 million yuan, it is affiliated to Century Jinyuan Group.
Century Jinyuan Group's real estate business is not large.According to the data of the Central Index Academy, in 2021, the company will achieve full-caliber sales of 12.81 billion yuan, ranking 148th in the industry; in the first five months of this year, it only achieved sales of 1.64 billion yuan, and its ranking slipped to 161st.
The reason why Century Jinyuan ended the acquisition is most likely for Tengyun Zhuke, which is a key building of the group. This business positioning is quite in line with the contemporary green building.
According to its official website, in order to meet the needs of China's real estate industry to improve quality and shift gears and the development of new cities, the company has specially established Tengyun Zhuke, which aims to empower building technology and launch a combination of green energy saving, smart home, digital intelligence, and the Internet of Things. A pan-real estate asset-light solution integrating other service scenarios to create a new type of technology real estate.
When debt restructuring is in progress
An obvious signal is that in this transaction, Modern Land is no longer hesitant or difficult to part with.Even if the transaction consideration is discounted and the payment process sets up gambling clauses, in the face of a liquidity crisis and an environment where it is increasingly difficult to realize assets, all of these seem to be less important.
In late October 2021, Modern Land failed to roll over a 250 million dollar bond with a coupon rate of 12.85%. The company failed to repay the relevant debt on schedule, and some creditors demanded early repayment of the relevant financing.
The sudden debt default disrupted Modern Land's plans to sell its property company, First Services.
On October 7 of that year, Sunac Service and First Service signed a framework agreement to acquire about 32.22% of the latter's equity at a price of 693 million yuan, and may make an unconditional mandatory cash tender offer to it.If the mandatory acquisition is completed, First Service will become a wholly-owned subsidiary of Sunac Service and will apply for delisting.
However, the outbreak of liquidity problems in contemporary real estate has made Sunac services more cautious. They believe that these problems have buried many risks for the development of the first service, so they have reduced the transaction consideration and adjusted transaction-related arrange.
On December 31, the seller suddenly overturned the consensus reached by both parties on the transaction consideration and related transaction arrangements, and the transaction was terminated.At the same time, within 1 year from the termination date, without the prior consent of Sunac Service, all controlling shareholders and sellers of First Service may not sell or transfer their shares.
The property management business being "banned" means that Modern Land has lost a bulk asset that can be sold at a price, and it also means that Modern Land needs to seek other feasible ways to ease the company's financial pressure as soon as possible.
This is obviously not easy.In February 2022, Modern Land voluntarily announced the results of the negotiation with creditors, and the company plans to carry out overseas debt restructuring.According to the data, it currently has 5 existing dollar bonds with a scale of more than 1.3 billion US dollars and an average coupon of 11.58%.
According to relevant media reports, the debt restructuring of Modern Land will be carried out in the form of cash redemption and issuance of new notes.On the one hand, the company plans to use $22.916 million in cash to redeem some of the notes, and the specific funds will be distributed proportionally among creditors.At the same time, it plans to issue five new notes to repay the above-mentioned bonds by repaying the old with the new.
On March 24 this year, the company announced that creditors representing more than 75% of the outstanding principal amount of the existing notes had entered into a restructuring support agreement to support the proposed restructuring.In the follow-up court procedure, if the company obtains more than half of the support rate of more than 75% of the overall creditors in attendance, it can officially pass the court reorganization to fully release the corresponding debt default.
The market also reported that Modern Land recently filed for Chapter 15 bankruptcy in New York, a legal process that allows the company to protect U.S. assets while reorganizing elsewhere.
Now, the bondholders' meeting is about to be held. If all goes well, Modern Property, which has been in the quagmire for nearly a year, will finally be able to take a step forward.
