The bankrupt reorganization investor of Guiyang dechangxiang Pharmaceutical Co., Ltd. (hereinafter referred to as dechangxiang) in prison officially surfaced. The intervening party was the A-share company Guizhou Sanli Pharmaceutical Co.Ltd(603439) (603439), which had planned to take back the controlling right.
On February 6, Guizhou Sanli Pharmaceutical Co.Ltd(603439) issued an announcement on foreign investment. The listed company made a one-time contribution with an investment amount of 232 million yuan and obtained 95% equity of dechangxiang. Thus, Guizhou Sanli Pharmaceutical Co.Ltd(603439) became the bankruptcy reorganization investor of dechangxiang.
Dechangxiang is the only century old pharmaceutical enterprise in Guizhou Province. It was once a well-known drug number in China. Its predecessor was Guiyang traditional Chinese medicine factory. It has many high-quality drug approvals and certain brand value, which has become a congenital condition to attract investors. Before the reorganization, the controlling shareholder of dechangxiang was Guizhou jingyiyuan ecological planting Co., Ltd.
However, in recent years, dechangxiang’s operation has been in trouble. The total assets and liabilities of Changxiang were RMB 12.79 billion, which was close to RMB 1.708 billion as of November 2021, with a corresponding net debt ratio of RMB 1.72 billion.
This management dilemma has become a mirror of the change of industrial environment. Under the continuous reform of the pharmaceutical market environment, if enterprises do not want to be eliminated by the market, they should follow the “pace” of the market and make transformation. However, not all industrial players can smoothly promote this transformation and upgrading from the perspective of dechangxiang and the bankruptcy cases of Beijing Xingfu pharmaceutical.
However, compared with many bankrupt players, dechangxiang is lucky to welcome the “White Knight”. Dismantling Guizhou Sanli Pharmaceutical Co.Ltd(603439) according to the details of this investment, the company will make a one-time investment of 232 million yuan to obtain 95% equity of dechangxiang, with the corresponding asset value of 79.7428 million yuan and the premium rate of 190.94%.
According to the announcement, the investment fund will be used to pay off the undisputed creditor’s rights confirmed by the people’s court, the litigation related (suspended) creditor’s rights confirmed by the effective judgment document of the people’s court, and pay the expenses of bankruptcy reorganization. After paying off, de Changxiang’s liabilities will be greatly reduced.
Although through this investment, Guizhou Sanli Pharmaceutical Co.Ltd(603439) can include de Changxiang into its subsidiaries, the premium rate of nearly twice is also relatively high.
For the reasons behind it, there are both Guizhou Sanli Pharmaceutical Co.Ltd(603439) considerations that dechangxiang’s current drug approval will help listed companies achieve sales breakthrough and the brand effect brought by century old brands. Moreover, after the reorganization, dechangxiang and Guizhou Sanli Pharmaceutical Co.Ltd(603439) can make use of the resources of thousands of commercial companies, thousands of grade hospitals, tens of thousands of pharmacies, clinics and grass-roots medical institutions across the country, Rapid expansion and increase market share, so both sides also look forward to the emergence of synergy.
Guizhou Sanli Pharmaceutical Co.Ltd(603439) believes that after the listed company invests in dechangxiang, it is conducive for the listed company to set foot in other Chinese patent medicine varieties and departments, bring new profit growth points for the company, alleviate the risk of relative concentration of the company’s products and improve the company’s industry competitiveness. In line with the company’s development strategic planning and long-term interests.
Looking back, on December 3, 2021, Guiyang intermediate people’s court made a decision that the manager publicly recruited dechangxiang restructuring investors to the society. From the details of the announcement disclosed tonight, Guizhou Sanli Pharmaceutical Co.Ltd(603439) participation in the restructuring of dechangxiang investment has made rapid progress.
According to the analysis of E company, before applying for bankruptcy reorganization, de Changxiang had been sold and terminated for business problems at least twice.
In July 2020, shortly after Guizhou Sanli Pharmaceutical Co.Ltd(603439) A shares were listed, the company planned to increase capital to Hanfang pharmaceutical and dechangxiang in cash. The plan at that time was to pay a deposit of RMB 100 million to the asset controller and obtain no more than 51% equity. However, after a lapse of three months, the capital increase plan was terminated due to the unsatisfactory operation of dechangxiang pharmaceutical.
Looking back, in 2018, Guangdong Jiaying Pharmaceutical Co.Ltd(002198) also planned to purchase the controlling interest of dechangxiang through non-public offering of shares and payment of cash. At that time, the expected transaction amount was no less than RMB 500 million. However, in March 2019, Guangdong Jiaying Pharmaceutical Co.Ltd(002198) announced the termination of the acquisition plan because the company believed that dechangxiang pharmaceutical had been established for a long time, the enterprise’s financial situation was complex, and the market environment and regulatory requirements of the pharmaceutical industry had changed greatly.
In contrast, the owner price of Guizhou Sanli Pharmaceutical Co.Ltd(603439) is much lower than the previous price of Guangdong Jiaying Pharmaceutical Co.Ltd(002198) . Does this mean there are enough safety cushions?
To be sure, there are still many challenges ahead. One of the core is that due to the relatively large amount of debt of dechangxiang, the restructuring plan must face the risks of macroeconomic fluctuations, regional economic fluctuations, possible major adverse changes in government regulations and policies, the emergence of industrial depression cycle, market prices and other macro environmental changes during the implementation period. Therefore, how to deal with the macroeconomic environment and national policy risks is an important issue for Guizhou Sanli Pharmaceutical Co.Ltd(603439) and de Changxiang.
