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Alert Raised? Two State-Owned Companies Enter the Arena, Evergrande’s 130 Billion Battle Resolved
Source: Yema Finance
Original Mustang Finance
After Evergrande and Shenshenfang “peacefully parted ways,” the 130 billion yuan of war investment introduced became the focus of market attention.
Now, the war investment of 130 billion has been liquidated. Three months after Evergrande’s “funding alert” was leaked, Evergrande completely dismantled the “thunder” when two major state-owned companies entered the market.
On the night of November 22, Evergrande (3333.HK) issued an announcement that 130 billion yuan of war investment was liquidated, of which 125.7 billion yuan of war investment was converted to ordinary shares, and Evergrande repurchased in cash the remaining 4.3 billion yuan of war investment.
The “Fund Alert” is lifted!
More than 90% of the war investment has been converted into common stocks, which means that Evergrande’s debt repayment pressure will drop dramatically next year and the “funding alert” has been removed entirely.
Evergrande stated in the announcement that 125.7 billion war investments have signed a supplemental agreement to convert to common stock, of which 86.3 billion war investments have previously signed an agreement to continue; 39.4 billion of war investments have signed a supplementary agreement, of which 20 billion are settled by talents from Shenzhen. Group Co., Ltd., 10 billion are held by Guangzhou City Investment Investment Co., Ltd., the other 9.4 billion are held by Shenye Group Co., Ltd. and other original strategic investors; the remaining 4.3 billion will be bought back by Evergrande in cash.
Image Source: Evergrande ad
In fact, at the end of September, Evergrande struck a deal with an 86.3 billion yuan strategic investor, agreeing to convert a war investment into ordinary shares. This also means that Evergrande cannot buy back this part of the war investment.
At that time, Evergrande still had 43.7 billion yuan from strategic investors who did not sign contracts. The whereabouts of this 43.7 billion yuan war investment became the focus of the market. .
Now, after two months, Evergrande has not only removed the pressure to rescue war investment from foreigners, but has also “seized” two major state-owned companies – Evergrande’s two major new shareholders reportedly not small , Shenzhen Anju Group talents is a large state-owned company in Shenzhen, which focuses on public housing investment construction and operations management; Guangzhou Urban Investment Investment is a large state-owned company in Guangzhou, which focuses on urban infrastructure investment and financing, construction, operation and management.
The equity participation of the two main SOEs in Evergrande fully demonstrates the high recognition of Evergrande’s stable operation by state capital and strategic investment, and the optimistic view of Evergrande’s development prospects. In the future, all parties are more likely to achieve mutually beneficial cooperation in investment and operation of residential talent housing, construction and operation of urban infrastructure, and reconstruction of the old city. “
Of the 86.3 billion war investment shares that were converted into ordinary shares two months ago, it has now expanded to 126.7 billion yuan. The failure of the reorganization of Shenzhen and Shenzhen Real Estate (000029.SZ) back to A has put pressure on Evergrande to redeem the war investment, and the impact of the debt is almost negligible.
Yan Yuejin, a well-known real estate analyst, told Yema Finance (WeChat public account: ymcj8686): “The most severe moment of the Evergrande turmoil has passed. Mutual funds have been converted into common stocks. Investors chose for fighting alongside Evergrande. The outside world still recognizes Evergrande, which can further the development of Evergrande’s business. ”
Why does the 130 billion war investment support Evergrande?
Why do many state-owned companies, institutions, and other powerful actors choose to support Evergrande and vote with their feet?
In fact, after this battle, the industry has a deeper understanding of Evergrande’s constant development trend and determination. Already at the beginning of the year, Xu Jiayin established a new strategy of “high growth, scale control and debt reduction”. Although he has not yet reached the moment of acceptance, Evergrande’s determination and strength are obvious to all.
When rumors of the “funding chain break” were on the rise, to overcome the rumors, Evergrande was “forced” to repeatedly disclose the status of the family, use data to speak and answer external questions.
The bright spot of this house stunned the outside world.
High growth is the fundamental way to achieve deleveraging. In order to reduce debt in a “cruel” way, Evergrande fought a beautiful and tough sales battle: From January to October this year, Evergrande achieved sales of 632.59 billion yuan and sales of 530.74 billion yuan. All-time highs topped last year’s data. Receipt means that the cash flow increases, but it also means that the debt ratio decreases.
In addition, Evergrande also optimizes assets through the allocation, transfer of shares and spin-off of high-quality asset listings. Full-speed “load reduction” has demonstrated superior deleveraging capabilities. In the past two months, Evergrande has successively introduced HK $ 31.8 billion in group-level equity investments through real estate, real estate, automotive and other business sectors.
Among them, Evergrande Property introduced HK $ 23.5 billion in strategic investment, Evergrande Automobile introduced HK $ 4 billion in investment, China Evergrande introduced HK $ 4.3 billion in equity investment, and Evergrande also sold the capital of Guanghui Group to return 14.85 billion yuan of funds, increasing net assets. The cash flow is further enriched.
This is not the end. In the future, Evergrande will make a predictable big move in the capital market. Evergrande’s real estate sector is expected to list in Hong Kong early next month. Strategic investors who have invested in 14 companies, including Huatai International, CITIC Capital, Yunfeng Fund, ABC International and Everbright Holdings, etc., Jack Ma and Ma Huateng have rarely come together to help Evergrande.
Evergrande Motors has also started advisory work on the science and technology innovation board listing, including Tencent, Yunfeng, Sequoia, Didi Chuxing and many other big players who want to get a piece of the new energy field and bet on Evergrande Motors.
Capital market recognition not only provides protection and confidence to the market for auto and real estate development, but also goes a long way in “reducing the burden.” Licensed organizations believe that the listing and listing of properties and automobiles will cause Evergrande’s net debt ratio to drop by at least 50%.
It can be said that Evergrande did everything possible to reduce the debt, and the result was really good: already on October 23, Evergrande issued an advertisement in which it said that it had paid large debts three times in the last 10 days (121 Debt Hong Kong dollar foreign exchange, Hong Kong dollar 13.25 billion corporate bonds, Hong Kong dollar 4 billion mezzanine loans for office buildings in Hong Kong), a total of about Hong Kong $ 29.4 billion in debt payment, the company’s bonds that mature during the year have been canceled.
Now 130 billion war investments have been properly resolved, and the debt pressure and war investment buyback pressure in Evergrande have been resolved one by one. Today’s Evergrande has completely removed the load that has been on your shoulders for a long time, you can pack lightly and keep running.
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