On December 27, Flower King Eco-Engineering Inc(603007) announced that the company’s main bank accounts were frozen, and the actual frozen funds were about 30 million yuan.
The company said that the bank account freeze had a great impact on the company’s capital operation and operation management. The company is negotiating and communicating with the court, the applicant and Shaoshan municipal government to solve the problem as soon as possible.
the main bank account is frozen
According to the announcement, Flower King Eco-Engineering Inc(603007) financial personnel found that the company’s main bank accounts were frozen on the morning of December 27. After verification with the bank, the actual frozen funds amounted to 29.819 million yuan, accounting for 17.29% of the monetary funds in the company’s latest audit report. Up to now, Flower King Eco-Engineering Inc(603007) monetary fund balance is 58.0635 million yuan, of which litigation frozen funds account for 51.36%.
On December 27, the latest closing price of Flower King Eco-Engineering Inc(603007) was 3.31 yuan, up 0.3%. The CSI Taurus app market shows that Flower King Eco-Engineering Inc(603007) share prices have fallen all the way this year, with a cumulative decline of more than 38%, and the latest market value is only 1.111 billion yuan.
overdue loans involving holding companies
The announcement shows that the applicant applying for freezing funds this time is Bank Of Changsha Co.Ltd(601577) Xiangtan Shaoshan sub branch. According to the announcement data, in December 2018, Flower King Eco-Engineering Inc(603007) provided guarantee for the 280 million yuan project loan applied by the holding subsidiary Shaoshan huawangmeili Rural Construction Project Investment Co., Ltd. (hereinafter referred to as “Shaoshan project company”) in Bank Of Changsha Co.Ltd(601577) . The actual loan amount is 150 million yuan respectively, the loan term is 7 years, and Flower King Eco-Engineering Inc(603007) provides joint and several liability guarantee. The repayment is made in installments every month. The repayment source is the project operating income and the government feasibility gap subsidy.
As of November 30, 2021, the balance of the loan was 103.7379 million yuan. The loan principal of RMB 11.76 million has expired on December 21, 2021. At present, Shaoshan project company, Bank Of Changsha Co.Ltd(601577) and Shaoshan Agricultural Bureau are communicating and coordinating to solve the loan repayment.
Flower King Eco-Engineering Inc(603007) also said that Shaoshan project company received 36.81 million yuan of government gap subsidy in December 2018 and 11.5 million yuan in January 2020, and failed to receive relevant funds in the follow-up.
increased liquidity pressure
The announcement shows that the frozen bank accounts include basic accounts and general accounts, which has a great impact on the company’s capital operation, operation and management. The company will eliminate the risk that some funds are frozen as soon as possible, so that the company’s bank account can return to normal as soon as possible.
Flower King Eco-Engineering Inc(603007) said that the company will actively negotiate and communicate with the court, the applicant and Shaoshan municipal government in accordance with relevant national laws and regulations, strive to reach an agreement on the solution as soon as possible, lift the freezing of the company’s bank account and return to normal state. Subsequent companies will actively solve the problems of freezing and overdue loans through but not limited to litigation, so as to protect the legitimate rights and interests of listed companies.
The company also said that because the loan is overdue, Shaoshan project company faces the risks of early repayment of principal, payment of relevant liquidated damages, late fees and default interest, and the company faces the risk of fulfilling its guarantee responsibility in advance, aggravating the company’s financial tension. The company faces the risks of litigation and arbitration and asset seizure due to overdue debts. In addition, the subsequent freezing of funds in other accounts of the company is not ruled out until the freezing of accounts of the company is lifted.
(China Securities Journal)
