About China Southern Airlines Co., Ltd
Application documents for non-public offering of a shares
Response to feedback
Sponsor (lead underwriter)
Date of signature: January, 2002
About China Southern Airlines Company Limited(600029)
Reply to feedback on application documents for non-public offering of a shares
China Securities Regulatory Commission:
We have received the notice of the CSRC on the first feedback on the examination of administrative licensing projects (No. 213596) (hereinafter referred to as the “feedback”) issued by your commission on January 20, 2022. China Southern Airlines Company Limited(600029) (hereinafter referred to as “the company”, “600029}” or “the issuer”) and China International Capital Corporation Limited(601995) (hereinafter referred to as “the sponsor” or “the sponsor”), Beijing Dacheng Law Firm (hereinafter referred to as “the issuer’s lawyer”) KPMG Huazhen Certified Public Accountants (special general partnership) (hereinafter referred to as “the issuer’s accountant”) and other intermediaries have carefully implemented the problems listed in the feedback one by one, and replied to the relevant problems. Please review.
Unless otherwise specified, the abbreviation or interpretation involved in this reply is the same as that in the due diligence report.
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Question 1 according to the application materials, as of September 30, 2021, the applicant has external guarantee. Please add: (1) whether the applicant standardizes the guarantee behavior in accordance with the requirements of relevant laws and regulations, performs necessary procedures and strictly controls the guarantee risk; (2) Whether the other party provides counter guarantee for the above guarantee matters; (3) Whether the applicant discloses the reasons and reveals the risks to the investors; (4) Whether the related directors or shareholders withdraw from voting in accordance with relevant laws and regulations during the deliberation of the board of directors or the general meeting of shareholders; (5) Whether the total amount of external guarantee or the amount of individual guarantee exceeds the limit specified in laws, regulations or the articles of Association; (6) Whether the obligation of information disclosure is fulfilled in time; (7) Whether the independent directors make special explanations and express independent opinions on external guarantees in the annual report in accordance with the regulations; (8) The impact of external guarantee on the applicant’s financial status, profitability and going concern. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions 4 question 2 according to the application materials, the object of this non-public offering is the controlling shareholder China Southern Airlines Group. The applicant is requested to supplement: (1) the source of subscription funds of the above-mentioned specific investors, whether there is external raising, holding on behalf of others, structured arrangement or direct or indirect use of the funds of the applicant and its related parties for this subscription; (2) Whether the applicant provides financial assistance, compensation, promised income or other agreements and arrangements to the above-mentioned specific investors directly or through its stakeholders; (3) Whether the subscribers comply with the relevant provisions of the decision on Amending the measures for the administration of securities issuance of listed companies and the decision on Amending the detailed rules for the implementation of non-public offering of shares of listed companies issued on February 14, 2020; (4) The applicant and the subscribers of this non-public offering of shares are requested to promise not to buy or sell shares and disclose information six months before and after this offering in accordance with the relevant provisions of the securities law. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions 14 question 3 according to the application materials, during the reporting period, there was a coincidence between the senior management of the applicant and the senior management of the controlling shareholder China China Southern Airlines Company Limited(600029) Group Co., Ltd. Please add: (1) whether the personnel, assets and finance of the applicant and the controlling shareholder or actual controller are separated, and whether the organization and business remain independent; (2) Whether the applicant can operate and manage independently; (3) Whether it may seriously affect the continuous operation of the company; (4) Whether the applicant and the controlling shareholder have violated laws and regulations, or the agreements or commitments they have signed; (5) Whether it seriously damages the legitimate rights and interests of investors and social and public interests; (6) In order to ensure the independence of the listed company, the applicant’s follow-up solution and the time point of solution. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions Question 4 according to the application materials, the applicant has land and real estate that have not obtained the ownership certificate. Please add: (1) the reasons for not obtaining the land and house use certificate or real estate certificate; (2) Whether the use of land and houses without use certificate or real estate certificate is legal and compliant; (3) Whether it may damage the legitimate rights and interests of the applicant or investors and whether there are relevant safeguard measures. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions 26 question 5 according to the application materials, there are 6 holding subsidiaries and joint-stock companies in the business scope of the applicant and all its subordinate holding and joint-stock companies with potential housing related problems. Please add: (1) whether the applicant has the qualification of real estate development during the reporting period; (2) Whether there are real estate development projects; (3) Whether there is real estate business income; (4) Whether the business scope includes real estate development; (5) Whether the raised funds are invested in real estate development projects. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions Question 6 according to the application materials, part of the applicant’s business comes from the overseas market and has a large number of foreign currency (mainly US dollars) debts. The applicant is requested to add the possible impact of covid-19 epidemic, international trade friction and exchange rate fluctuation on the applicant’s production and operation, as well as the response measures taken by the company. The sponsor and the applicant’s lawyer are requested to check the above matters and express clear opinions 39 question 7 the amount of monetary capital and external borrowings of the company is high. The applicant is requested to: (1) the specific deposit of monetary funds, and in combination with the operation of the group and the finance company, explain whether the funds deposited with the finance company of the group are safe and whether there are restrictions on the use of funds; Whether the previous raised funds are deposited in the group finance company, and whether the balance of the previous raised funds matches the deposit balance of monetary funds such as banks and finance companies. (2) The matching of monetary capital and foreign loans with interest income and expenditure, combined with the company’s operation, assets and liabilities, cash flow, etc., explain whether the company has debt repayment risk. (3) Combined with the current monetary fund holding and use plan, explain the necessity of this financing and the rationality of the financing scale. The recommendation institution and accountant are invited to give verification opinions In question 8, the applicant is requested to supplement the use of the previously raised funds and whether the use progress is in line with expectations; The necessity of this financing when the remaining large amount of the previously raised funds is not used. The recommendation institution is requested to give verification opinions Question 9 in the most recent year, the company’s net profit was a loss. Please explain the impact of covid-19 epidemic on the company’s operation, the current recovery, the expected improvement of future performance, and whether the relevant risk tips are sufficient.
The recommendation institution and accountant are invited to give verification opinions In question 10, the applicant is requested to add: the specific situation of the financial investment and financial business implemented or planned to be implemented by the company six months before the board of directors, and in combination with the company’s main business, explain whether the company holds financial investment (including financial business) with large amount and long term at the end of the most recent period. The recommendation institution and accountant are invited to give verification opinions In question 11, the applicant is requested to explain whether the financial treatment such as the provision of relevant estimated liabilities complies with the provisions of the accounting standards in combination with the pending litigation, arbitration and other disputes. The recommendation institution and accountant are invited to give verification opinions seventy-five
Question 1 according to the application materials, as of September 30, 2021, the applicant has external guarantee. Please add: (1) whether the applicant standardizes the guarantee behavior in accordance with the requirements of relevant laws and regulations, performs necessary procedures and strictly controls the guarantee risk; (2) Whether the other party provides counter guarantee for the above guarantee matters; (3) Whether the applicant discloses the reasons and reveals the risks to the investors; (4) Whether the related directors or shareholders withdraw from voting in accordance with relevant laws and regulations during the deliberation of the board of directors or the general meeting of shareholders; (5) Whether the total amount of external guarantee or the amount of individual guarantee exceeds the limit specified in laws, regulations or the articles of Association; (6) Whether the obligation of information disclosure is fulfilled in time; (7) Whether the independent directors make special explanations and express independent opinions on external guarantees in the annual report in accordance with the regulations; (8) The impact of external guarantee on the applicant’s financial status, profitability and going concern. The recommendation institution and the applicant’s lawyer shall check the above matters and express clear opinions.
reply:
(I) whether the applicant standardizes the guarantee behavior in accordance with the requirements of relevant laws and regulations, performs necessary procedures and strictly controls the guarantee risk
1. Guarantee provided by the issuer to objects outside the scope of consolidated statements
As of September 30, 2021, the balance of guarantees provided by the issuer to the objects outside the scope of the consolidated statements totaled 185147100 yuan, which were guaranteed by the issuer for the training fees and tuition and miscellaneous fees of some flight cadets who were trained at their own expense and applied for personal loans. Such external guarantees of the issuer have fulfilled the necessary internal review procedures and information disclosure obligations. The details are as follows:
Sequence guarantee secured by the secured party guarantee balance guarantee to guarantee internal procedure information disclosure No. party guarantee Party (10000 yuan) start date method
Shareholders’ meeting in 2006
The board of directors agreed to authorize the resolution meeting of the board of directors and shareholders to make an announcement in each accounting year (announcement: cumulative total number of internal audit and approval of industrial and Commercial Bank of China: Lin 1 Nanfang Jiang mouhanhang Co., Ltd. 2.53 November 2009 and November 2026, and the guarantee amount shall not exceed RMB 1 2007-24) ； The foreign guarantee of the airline Guangzhou Liuyue 13 billion yuan; Announcement of the board of directors: Huahua sub branch held the 5th meeting of the company on December 5, 2007 (Announcement No.:
Adopted at the interim board meeting of the board of directors (2007-42)
The earliest is the announcement that Zhang and other ICBC agreed to authorize the board of directors in September 2009 and September 2026 (announcement 2: on February 15 and February 15, 2519, the South 91 self-employed Co., Ltd. guarantees that it will number in each accounting year: the latest is the latest, and the latest is the cumulative total of internal audit and approval in Guangzhou of Linhang aviation natural person company, 2008-17); Announcement of Huahua sub branch on November 18, 2011 and November 2028, with the amount not exceeding RMB, the resolution of the board of directors (prepared by the announcement)
Sequence guarantee secured by the secured party guarantee balance guarantee to guarantee internal procedure information disclosure No. party guarantee Party (10000 yuan) start date method
The earliest foreign loan number of 400 million yuan: lin2008 – anmou and other agricultural bank of China in September 2009 and September 2026; 28）
3. Nanfang 85 self-employed Co., Ltd. 2202. July 15, August 15, guaranteed August 27, 2008
The fifth meeting of the company was held at the latest by Guangzhou white, an airline natural person company
Yun sub branch interim director of the 12th board of directors in December 2011 and 2028
Adopted at the board meeting on May 5
Earliest for
Wen and other ICBC may 2011 may 2028
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