Report of Orient Securities Company Limited(600958) underwriting and recommendation Co., Ltd. on China High-Speed Railway Technology Co.Ltd(000008) asset impairment risk and temporary entrusted management affairs of some directors' resignation
Orient Securities Company Limited(600958) underwriting sponsor Co., Ltd. (hereinafter referred to as "Oriental Investment Bank") as China High-Speed Railway Technology Co.Ltd(000008) (hereinafter referred to as " China High-Speed Railway Technology Co.Ltd(000008) ", "000008}" or "company") publicly issued corporate bonds (phase I) to professional investors in 2020 (bond abbreviation: 20 high speed railway 01, bond Code: 149206. SZ) and China High-Speed Railway Technology Co.Ltd(000008) publicly issued corporate bonds to professional investors in 2020 (phase II) (bond abbreviation: 20 high-speed railway 02, bond Code: 149322. SZ), in accordance with the measures for the administration of corporate bond issuance and trading, the code of practice for corporate bond trustees and other relevant provisions and the agreement on the bond trustee management, the trustee now reports the risk of China High-Speed Railway Technology Co.Ltd(000008) asset impairment and the resignation of some directors as follows:
1、 Impairment of assets
According to the announcement of China High-Speed Railway Technology Co.Ltd(000008) 2021 annual performance forecast and asset impairment risk warning (Announcement No.: 2022007) disclosed by the company on January 29, 2022, the company expects to realize a net profit attributable to shareholders of the listed company of 650 million yuan to 130 million yuan in 2021. According to the company's performance forecast, the company plans to withdraw asset impairment of RMB 700 million to RMB 1.3 billion for the long-term equity investment of Henan Yubo Railway Development Co., Ltd. (hereinafter referred to as "Yubo company"), which will have a great impact on the net profit in 2021.
1. Project investment overview and project status
Yubo company has subscribed registered capital of 12.076 billion yuan and paid in registered capital of 5.264 billion yuan. In order to promote the implementation of the company's whole line operation and maintenance strategy, the company increased its capital by 1.6 billion yuan to Yubo company in December 2019, obtained 13.25% of its equity, and has completed all its investment obligations to Yubo company. As of December 2021, the total assets of Yubo company were 10.849 billion yuan, including 9.906 billion yuan of construction in progress, 529 million yuan of intangible assets and 207 million yuan of fixed assets; Interest bearing liabilities are about 4.1 billion yuan, accounts payable are 1.054 billion yuan and net assets are 5.263 billion yuan (the above data are Unaudited). In the fourth quarter of 2021, the situation of Yubo company deteriorated under the comprehensive influence of epidemic situation, flood and insufficient funds. The project continued to shut down, and only the first phase of 83km was completed and put into trial operation. There was no scale effect and operation loss. The unpaid contribution of other shareholders is nearly 7 billion yuan, and there has been no clear investment plan, resulting in the shortage of funds and financing difficulties of Yubo company, affecting the normal operation and project construction. China High-Speed Railway Technology Co.Ltd(000008) has been coordinating the capital injection and reorganization of strategic investors, but the reorganization was shelved because some shareholders did not agree with the reorganization plan. In November 2021, a creditor of Yubo company submitted an application for bankruptcy of Yubo company to Xuchang intermediate people's court, which has not been accepted by the court at present; A major shareholder of Yubo company filed a lawsuit to require Yubo company to repay the loan principal and interest of 65.3 million yuan. The court has filed a case. In December 2021, the intermediate people's Court of Zhengzhou City, Henan Province issued a civil ruling on the dispute over the financial loan contract between a financial institution, the second largest creditor of Yubo company, and Yubo company, ruling to freeze the property worth 820 million yuan under the name of Yubo company. By the end of 2021, the loan balance of Yubo company's financial institutions was about 3.7 billion yuan, of which more than 1.9 billion yuan of principal and interest were overdue, involving 10 financial institutions. 42 bank accounts of Yubo company were frozen, and there was a risk of being listed as dishonest executors. In 2021, Yubo company had 22 litigation cases, involving an amount of about 1.56 billion yuan, of which 12 cases were pending execution after the judgment came into force, and the other party of 7 cases had applied to the court for enforcement. Yubo company is short of funds and difficult to operate, which has affected the salary payment of employees, and there is great uncertainty about the stability of subsequent employees.
2. China High-Speed Railway Technology Co.Ltd(000008) post commissioning work
After the capital increase, we actively promoted the construction and operation of Yubo company. Within the scope of subscribed investment, timely contribute to solve urgent problems such as employees' wages, social security and operating funds, and maintain the stability of employees of Yubo company; Legally and in accordance with regulations, call up the capital contribution of non contributing shareholders, and coordinate and resolve the financing problems of Yubo company; Promote Yubo company to introduce strategic investors, successively coordinate Yubo company to conduct multiple rounds of negotiations with multiple strategic investors, and cooperate with other shareholders of Yubo company to report and communicate with local governments for many times. However, due to the difficulty of reaching an agreement on the demands of all parties, no effective scheme has been formed at present. Due to difficulties in the construction and operation of Yubo company, China High-Speed Railway Technology Co.Ltd(000008) believes that the investment purpose cannot be realized and the conditions for equity repurchase have been reached. According to the agreement, on August 3, 2021, the company sent a letter on the obligation of equity repurchase to Henan luozhoujie Expressway Co., Ltd. (hereinafter referred to as "luozhoujie expressway"), the former largest shareholder of Yubo company, requiring luozhoujie Expressway to fulfill the obligation of equity repurchase within 30 days after receiving the notice, However, luozhoujie expressway has not fulfilled and refused to fulfill the repurchase obligation. Faced with the increasing legal litigation and credit risk of Yubo company since the fourth quarter, in order to safeguard the interests of the company and its shareholders, China High-Speed Railway Technology Co.Ltd(000008) recently filed an equity repurchase arbitration, requiring luozhoujie Expressway to repurchase all the equity of Yubo company held by the company in accordance with the agreement, and pay the equity repurchase fund of 1.6 billion yuan and interest to the company, And bear the lawyer's fees of the company and the arbitration fees of the case.
3. Provision for impairment of assets
The company hired a third-party evaluation institution to conduct the impairment test and evaluation of long-term equity investment for the purpose of financial report. However, affected by the epidemic in Henan, the evaluation institution is unable to arrive at the site to carry out work and has not issued the evaluation results. Since the problems faced by Yubo company are difficult to solve in the short term and the project construction is difficult to continue in the short term, the sudden legal litigation and credit risk in the fourth quarter make the future construction and operation of Yubo company worrying. At the same time, considering the uncertainty of the arbitration judgment and execution of the company's equity repurchase, judging from the principle of prudence, the company plans to withdraw asset impairment of RMB 700 million to 1.3 billion for the long-term equity investment of Yubo company in 2021, which will have a great impact on the net profit of 2021.
2、 Resignation of some directors and by election of non independent directors
Announcement on resignation of non independent directors and by election of non independent directors on January 29, 20208 (Announcement No.: 2022003) due to work adjustment, Mr. Wang Xiang and Ms. Chang Zhizhen, the director of the company, will no longer serve as the director of the company with the consent of the original nominating shareholder unit. Mr. Wang Xiang applies to resign as a director of the company and a member of the audit committee of the board of directors. His resignation will take effect from the date when the resignation report is delivered to the board of directors. After his resignation, Mr. Wang Xiang will not hold any position in the company. Chang Zhizhen Ms. Chang Zhizhen applied to resign as a director of the company and a member of the strategic committee of the board of directors. Her resignation will take effect from the date when the resignation report is sent to the board of directors. After her resignation, Ms. Chang Zhizhen will not hold any position in the company.
The proposal on the nomination of non independent candidates of the 14th board of directors was adopted on February 27, 2021. In accordance with the relevant provisions of the company law and the articles of association, Mr. Kong Lingsheng is recommended by China national investment high Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) Investment Co., Ltd. and nominated as a candidate for non independent director of the 14th board of directors of the company after the qualification examination of the nomination committee of the board of directors of the company. If elected, he will also serve as a member of the audit committee of the board of directors of the company; Recommended by Beijing Haidian District State owned assets investment and Operation Co., Ltd. and after the qualification examination of the nomination committee of the board of directors of the company, Mr. congratulations is nominated as a candidate for non independent director of the 14th board of directors of the company. If elected, he will also serve as a member of the strategy committee of the board of directors of the company, The term of office starts from the date of deliberation and approval by the general meeting of shareholders to the expiration of the term of office of the 14th board of directors. The independent directors of the company expressed their independent opinions on the nomination of Mr. Kong Lingsheng and Mr. congratulations as candidates for non independent directors of the 14th board of directors of the company.
3、 Risks brought to the attention of investors
As the bond trustee of this bond, in order to fully protect the interests of bond investors and perform the duties of bond trustee, Dongfang investment bank issued this report in accordance with relevant regulations and reminded investors to pay attention to relevant risks after learning of the above related matters.
China Eastern Investment Bank will pay close attention to the matters related to this bond and will perform the duties of bond trustee in strict accordance with the measures for the administration of corporate bond issuance and trading, the Listing Rules of corporate bonds of Shenzhen Stock Exchange, the code of practice of corporate bond trustee, the prospectus and the trustee agreement.
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Orient Securities Company Limited(600958) underwriting and recommendation Co., Ltd. February 9, 2022
