On the evening of January 5, Flower King Eco-Engineering Inc(603007) (603007. SH) issued the “announcement on the rating adjustment of convertible corporate bonds”, which said that the company entrusted Far East credit evaluation Co., Ltd. (hereinafter referred to as “Far East credit”) to rate the issued A-share convertible corporate bonds (bond abbreviation: “huawang convertible bonds”, bond Code: 113595).
On January 4, 2022, far east credit issued the announcement of Far East credit on reducing the credit rating of huawang shares and related debts and listing them in the negative watch list, which lowered the long-term credit rating of Flower King Eco-Engineering Inc(603007) from BBB + to BBB -, and the credit rating of “huawang convertible bonds” from BBB + to BBB -, Huawang shares and “huawang convertible bonds” will be included in the negative observation list of possible credit rating reduction.
For Flower King Eco-Engineering Inc(603007) , this can be described as a “worse thing”.
overdue bank loan
According to the data, Flower King Eco-Engineering Inc(603007) (formerly referred to as huawang shares) was listed on the Shanghai Stock Exchange on August 26, 2016. Its main business is “landscape engineering construction and design business in the fields of municipal landscape, tourism landscape, road greening and real estate landscape”, and the actual controller is Xiao Guoqiang.
Flower King Eco-Engineering Inc(603007) one of the main reasons for the downgrade is that bank loans are overdue.
On December 30, 2020, Flower King Eco-Engineering Inc(603007) signed a working capital loan contract with Agricultural Bank Of China Limited(601288) Danyang sub branch, with a loan amount of 74 million yuan and a maturity date of December 29, 2021. Since then, Flower King Eco-Engineering Inc(603007) has signed the working capital loan contract with Agricultural Bank Of China Limited(601288) Danyang sub branch on June 15 and 16, 2021, with the loan amount of 24.5 million yuan and 24.5 million yuan respectively and the maturity date of June 14 and 15, 2022 respectively.
However, who would have thought that on December 27, 2021, Flower King Eco-Engineering Inc(603007) ‘s main bank account was frozen.
According to the 21st Century Business Herald reporter, the main reason why the bank account of Flower King Eco-Engineering Inc(603007) was frozen is that the company once provided guarantee for the 280 million yuan project loan applied by the holding subsidiary Shaoshan huawang Meili Rural Construction Project Investment Co., Ltd. (hereinafter referred to as “Shaoshan project company”) in Bank Of Changsha Co.Ltd(601577) .
According to the announcement of Flower King Eco-Engineering Inc(603007) , the above actual loan amounts are 150 million yuan respectively, with a loan term of 7 years. The company provides joint and several liability guarantee, and repays in installments every month. The repayment sources are project operating income and government feasibility gap subsidy.
As of November 30, 2021, Bank Of Changsha Co.Ltd(601577) loan balance is 103.7379 million yuan, and the loan principal of 11.76 million yuan has expired on December 21, 2021.
When Shaoshan project company was communicating and coordinating with Bank Of Changsha Co.Ltd(601577) and Shaoshan Agricultural Bureau to solve the loan repayment, the financial personnel of Flower King Eco-Engineering Inc(603007) found that the main bank accounts of the company were frozen on December 27.
What’s more, the loan account of Agricultural Bank Of China Limited(601288) Danyang sub branch involving Flower King Eco-Engineering Inc(603007) was frozen, with a frozen amount of 103.7379 million yuan.
As a result, due to the freezing of the loan account, Flower King Eco-Engineering Inc(603007) the above 74 million yuan loan due on December 29, 2021 could not be re loaned and extended, resulting in the overdue situation of the company’s Bank loan.
Agricultural Bank Of China Limited(601288) Danyang sub branch soon sent Flower King Eco-Engineering Inc(603007) the notice of early maturity of the loan, “announcing that the loan under the contract will expire on December 30, 2021, and it is necessary to return all the outstanding principal and interest of 123 million yuan under the contract.”
the share price fell by more than 36% last year
Due to the overdue debt, it is bound to lead to the decline of Flower King Eco-Engineering Inc(603007) financing capacity, aggravate the shortage of funds of the company, and have a certain impact on some businesses.
Far east credit believes that the relevant events have a great adverse impact on the financing environment and solvency of Flower King Eco-Engineering Inc(603007) . Therefore, the long-term credit rating of the company’s main body and the credit rating of “huawang convertible bonds” are reduced from BBB + to BBB -, and huawang shares and “huawang convertible bonds” are listed in the negative watch list of possible credit rating reduction.
To make matters worse, Flower King Eco-Engineering Inc(603007) is now in trouble.
On January 4, 2022, Jiangsu Securities Regulatory Bureau issued the decision on ordering corrective measures for Flower King Eco-Engineering Inc(603007) because the company’s “inaccurate disclosure of asset group information” and “insufficient provision for goodwill impairment”. Therefore, Jiangsu securities regulatory bureau decided to “take administrative regulatory measures ordering correction for Flower King Eco-Engineering Inc(603007) and record them in the integrity archives of the securities and futures market.”
The 21st Century Business Herald reporter noted that in early October last year, the CSRC had just disclosed the investigation results of Xiao Guoqiang, the actual controller of Flower King Eco-Engineering Inc(603007) . Because he was suspected of insider trading, the CSRC planned to decide to “order Xiao Guoqiang to deal with the illegally held securities, confiscate the illegal income of 8.7902 million yuan and impose a fine of 26.3707 million yuan.”
Up to now, Flower King Eco-Engineering Inc(603007) is still occupied by non operating funds of controlling shareholders and other related parties. The balance of principal and interest of the listed company is 95.4834 million yuan, which has not been resolved.
Although Flower King Eco-Engineering Inc(603007) disclosed that the sources of repayment funds of huawang group mainly include “revitalizing stock assets, accelerating the return of funds, obtaining loans through relief and other means, and obtaining financial support through strategic investors”, up to now, huawang group has no practical financing channels, nor has it signed relevant intentional agreements and memoranda, There is a risk that the occupied funds cannot be returned in time.
It is precisely because the controlling shareholders occupy funds for non operation that the company’s abbreviation was changed from “huawang shares” to ” Flower King Eco-Engineering Inc(603007) ” on May 6, 2021. Throughout 2021, Flower King Eco-Engineering Inc(603007) shares fell by about 36%.
On January 5, 2022, the share price of Flower King Eco-Engineering Inc(603007) was 3.45 yuan, and the total market value of the company was only 1.159 billion yuan.
(21st Century Business Herald)
