On April 15, a message that “the reorganization plans of 25 companies including Nanjing Construction Industry Group Co., Ltd. were approved by the court” was brushed in the circle of friends of Nanjing business circles.
It is reported that Nanjing construction industry group (formerly known as Nanjing Fengsheng Industry Holding Group Co., Ltd.) has been ranked among the top 500 private enterprises in China for many years. It is mainly engaged in construction, decoration, urban rail transit, municipal engineering, road engineering, bridge engineering and other construction and trade (building materials) businesses. After the debt crisis broke out at the end of 2018, the company had a large area of overdue debt. As the reorganization plan was approved by the court, the company was also out of bankruptcy.
“The court has just passed the ruling. How to develop in the future depends on the arrangement of the manager. It is not suitable to release the next plan for the time being.” The relevant person of Nanjing Construction Engineering told the reporter of Huaxia times. However, the reporter noted that since the end of last year, three large private enterprise groups in Nanjing have continued to operate through debt restructuring. From the perspective of the restructuring plan, several are different, but the original management team still has relatively large business authority.
debt restructuring approved by the court
In April 15th, a WeChat official account of 25 companies reorganized by Nanjing Construction Industry Group Co., Ltd. was approved by the court. It was painted in the circle of friends of Nanjing business people.
According to the news, “on April 14, 2022, the Nanjing Intermediate People’s Court of Jiangsu Province made a civil ruling (2021) Su 01 breaking No. 20-5 to No. 44-5, ruling to approve the reorganization plan of 25 companies such as Nanjing Construction Industry Group Co., Ltd. and terminate the substantive merger and reorganization procedures of 25 companies such as Nanjing Construction Industry Group Co., Ltd.” The official account of the announcement is “construction industry group and its associated managers”.
It is reported that Nanjing construction industry group was changed to this name in 2019. It was previously called “Nanjing Fengsheng Industry Holding Group Co., Ltd.” and has been ranked among the top 500 private enterprises in China for many years. The founder of the group is Ji Changqun, who was born in Dangtu County, Anhui Province and started with construction industry. He once worked in Nanjing Jiasheng group, which belongs to his brother Ji Changbin. In 2002, he founded Fengsheng group, which arranged construction projects, real estate and investment, and ranked 89th on the 2018 Hurun 100 rich list with a wealth of 30 billion. Since the second half of 2017, Ji Changqun has gradually transferred the equity of Fengsheng group to his younger brother Ji Changrong. At the end of 2018, the company’s debt was overdue, and then the debt crisis broke out in a large area in 2019.
According to media reports, the financial debt Committee of Nanjing Construction Engineering Group was established in August 2019. According to the minutes of the meeting, 61 financial institutions attended the first creditors’ meeting, representing financial claims of 61.8 billion yuan. The members of the presidium include China Citic Bank Corporation Limited(601998) , Huishang bank, Hengfeng bank, China Zheshang Bank Co.Ltd(601916) , China Everbright Bank Company Limited Co.Ltd(601818) and other banks’ Nanjing branches, as well as Bank Of Communications Co.Ltd(601328) Jiangsu Branch, Huarong Huitong, Western trust, Jiangxi bank Zijinnong commercial firm.
distinguish between operating claims and non operating claims
The reporter of Huaxia times learned from the source that Nanjing construction industry group plans to adopt the logic of “introducing increment, integrating stock and making compensation”. The operating creditor’s rights will be paid off in cash, and the non operating creditor’s rights will be paid off through the “trust plan”. At the same time, it has set up bottom compensation clauses for the possible deficiencies to protect the rights and interests of creditors.
The reorganization plan proposes that the business creditor’s rights with a scale of less than 10 billion yuan will be paid off by extension. It is planned to pay off 50% in the first three years and complete it in five years. For non operating creditor’s rights, the shareholders of Nanjing construction industry group packaged all the equity of the group’s 25 companies and established a property right trust plan. Creditors enjoy 100% of the rights and interests of the reorganized new platform company through the trust plan in the proportion of 1 yuan of creditor’s rights corresponding to each trust beneficial right. At present, the audited total assets of these 25 companies are about 61.7 billion yuan. Nanjing construction industry group will actively plan to list its high-quality resources, pay off debts with shares and complete repayment in six years.
“Operational creditor’s rights refer to the so-called operational creditor’s rights, which inevitably produce some accounts receivable and other accounts receivable in business activities; non operational creditor’s rights refer to the creditor’s rights generated not in business activities, but in borrowing and investment, such as borrowing, etc.” Lawyer Wang Zhibin of Shanghai Minglun law firm told the reporter of Huaxia times.
In the whole scheme, the most critical step is to introduce strategic investors to integrate resources and promote listing. It will participate in debt restructuring in the form of agreement transfer with its own high-quality assets, increase repayment resources, but do not occupy the interests of the trust plan. It is estimated that this part of increment will be valued at about 60 billion yuan in the capital market in the future. Together with the assets of the new platform, it can basically cover all creditor’s rights. In addition, the scheme also sets up a bottom-up compensation clause to protect the rights and interests of creditors. The above sources said that at present, strategic investors have signed investment agreements.
“The future platform company will focus on the main business of the construction industry with Nanjing Construction Engineering Group, Jiasheng construction and Dongdong road and bridge as the core. When conditions are ripe, promote the listing of high-quality resources, and then repay creditors with equity value.” The above source told the reporter of Huaxia times.
The reporter noted that in the three years before the debt crisis, the average annual revenue of the above three construction enterprises totaled more than 16 billion yuan. Nanjing Construction Engineering Group Co., Ltd. is one of the first enterprises in Nanjing to obtain the special grade qualification of general contracting of housing construction projects. Jiasheng construction is an earlier enterprise in Jiangsu Province to obtain the special grade qualification of municipal public general contracting. East Road and bridge has the first-class qualification of general contracting for highway construction and municipal construction, and undertakes a large number of high-grade highway projects across the country. The integrated new platform company will be one of the few enterprises in Nanjing with double special grade qualifications for general contracting of construction and municipal construction. At the same time, it also has nine qualifications such as grade I professional contracting and grade a design.
Nanjing has successively completed debt restructuring of three large private enterprises
From the end of last year to now, Nanjing has successively completed the reorganization of three large private enterprises. Among them, Sanxian group completed the debt restructuring by agreement, and Yurun and Nanjing construction engineering group were ruled and approved by Nanjing Intermediate People’s court after being approved by the debt Committee. From the perspective of reorganization plan, several companies are different.
The reorganization of sanbo group is to clean up and dispose of non main business assets other than the white list of retained business assets. The proceeds or asset value from the disposal of such assets will be used to pay off debts and realize debt reduction. At the same time, powerful strategic investors will be introduced to actively revitalize the high-quality assets of the main business. War investment, as the capital relief party, will provide corresponding relief funds, and the enterprise will gradually complete various debt repayment work according to the restructuring plan.
In the reorganization plan of Yurun Group, the equity of 275 companies of “Yurun Department” was adjusted to the “Yurun selection” securitization platform by means of investor equity adjustment, Yurun holding capital contribution and gift, and the strategic investor China Huarong was introduced. The specific repayment plan for the debt is: cash repayment within one year after the approval of the reorganization plan for ordinary creditor’s rights less than 300000; Cash repayment within 5 years under 3 million; More than 3 million yuan shall be “paid in shares” at 17.8 yuan per share. After the debt to equity swap, the creditor held about 37% of the equity of Yurun selection, while Zhu Yicai held 33% of the equity of Yurun selection at zero consideration through Yurun holdings controlled by him. As a war investment, Jiangsu Branch of China Huarong Asset Management Co., Ltd. invested about 3 billion yuan and held 7%. In addition, 23% of the equity is reserved, which is reserved for debt repayment with shares and the implementation of gambling agreement before listing. Yurun holding has 100% voting rights on this part of equity. At the same time, the bankruptcy reorganization plan sets the gambling clause. Yurun promises that Yurun selection will realize a net profit of no less than 5 billion yuan in 2026 and apply for IPO in 2027.
Specifically, the restructuring plan disclosed by Sancheng did not mention paying debts with shares, while Yurun paid debts with some shares. 100% of the rights and interests of Nanjing Construction Engineering’s new platform company are enjoyed by creditors. In addition, the reorganization plan of Sanbao and Yurun did not mention the distinction between operating claims and non operating claims, while Nanjing Construction Engineering Group made a distinction. However, no matter which company it is, the original management team still has relatively large management authority.
