On February 25, Fujian real estate enterprise Zhengrong Real Estate Group Co., Ltd. (hereinafter referred to as "Zhengrong real estate") announced that on February 22, the company under ou Zongrong, chairman of the board of directors of Zhengrong real estate, transferred 140 million ordinary shares to a third party after exercising its security interest. It is worth mentioning that on February 16 and 17 not long ago, ou Zongrong sold a total of 63 million shares of Zhengrong real estate in two days.
The shareholding ratio of Euclidean family decreased to 60.02%
According to the announcement issued by Zhengrong real estate on February 25, on February 22, 2022, royue Limited (hereinafter referred to as "royue") transferred 140 million ordinary shares of Zhengrong real estate to a third party after exercising its security interest. Royue is wholly owned by ou Zongrong, the controlling shareholder of Zhengrong real estate. After the share transfer, royue's shares in the company were reduced to 2.08 billion shares, accounting for about 47.63% of the total issued share capital of Zhengrong real estate.
A few days ago, ou Zongrong sold Zhengrong real estate shares twice. On February 21, the equity disclosure of the Hong Kong Stock Exchange showed that Ou Zongrong sold a total of 63 million shares of the company on February 16 and 17, involving an amount of HK $57.0947 million.
According to the latest announcement, ou Zongrong and his family members (collectively referred to as the "Euclidean family") are persons acting in concert when exercising the voting right on the shares of Zhengrong real estate held by his investment company. After the share transfer on February 22, the Euclidean family jointly holds about 60.02% of the total issued share capital of Zhengrong real estate.
Zhengrong real estate liquidity crisis still needs to be resolved
It is noteworthy that behind ou Zongrong's transfer or sale of shares, Zhengrong real estate's debt is under pressure. Previously, on February 18, Zhengrong real estate announced that the company expected that its existing internal resources might not be enough to solve its debt due in March 2022, and was trying to seek the consent of the beneficial owner of the securities and put forward some proposed exemptions and amendments on the securities. As of that day, the outstanding principal of the securities was US $200 million.
To this end, Zhengrong real estate suffered successive downgrades from rating agencies. On February 21, Moody's downgraded Zhengrong real estate's corporate family rating (CFR) from "B3" to "caa2" and the company's senior unsecured rating from "caa1" to "caa3"; On February 22, Fitch lowered Zhengrong real estate's long-term issuer default rating from grade B to grade C, and lowered Zhengrong real estate's priority unsecured debt rating from grade B to grade C.
To this end, Zhengrong real estate also put more assets on the shelf to solve the liquidity crisis. According to the announcement issued by Zhengrong real estate on February 24, Zhengrong real estate has been exploring the possibility of selling a number of assets to improve its overall working capital situation. It is actively looking for suitable buyers (including joint venture partners and state-owned enterprises) for its possible sale of equity in a number of property development projects and investment properties, and discussing with a number of potential buyers. Zhengrong real estate believes that once the possible sale is implemented, it is expected to generate cash flow for the group to fulfill its financial commitments, enhance the group's financial stability and asset structure, and provide support for its long-term strategic development.
