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Caijing Capital Market News On the evening of January 18, the Shenzhen Stock Exchange issued a letter of concern to inquire about Tianqi Lithium. This time it is primarily aimed at whether the disclosure of Tianqi Lithium for a short period of time and the termination of the fixed increase is prudent and whether the company has a debt maturity. The two main problems of repayment risk.
The letter of concern shows that on January 16, 2021, Tianqi Lithium disclosed the “Preliminary Plan for Private Issuance of A Shares” (hereinafter the “Preliminary Plan”) and intends to inform the majority shareholder Tianqi Group or its designated wholly owned subsidiary. The public offering of shares raised 15.926 million yuan. On January 18, it also released the “Announcement on the termination of the non-public issuance of shares of the Company”, which is called to avoid any substantial short-term commercial risk that may be caused by continuing to advance in this event, and decided to terminate this non-public broadcast.
The Shenzhen Stock Exchange asked Tianqi Lithium to continue to explain and disclose whether Tianqi Lithium planned the non-public offering of shares and whether it fully considered the rationality and compliance with the plan. Then Tianqi Lithium canceled the disclosure in a short time. If the matter is prudent and if the members of the board of directors are diligent and fulfill their responsibilities during the review of the “plan” and the intermediary agencies in the due diligence process.
In addition, the Shenzhen Stock Exchange also raised concerns about whether Tianqi Lithium’s debt is past due and cannot be paid. According to the “plan”, the proceeds of the non-public issue of shares will be used to repay loans from Tianqi Lithium Bank and supplement the working capital. According to the “Feasibility Study Report”, as of September 30, 2020, the company had short-term loans of 3.132 billion yuan, non-current liabilities maturing in one year of 13.305 billion yuan, long-term loans of 13.026 million yuan and bonds payable of 2.026 million yuan.
The Shenzhen Stock Exchange asked Tianqi Lithium to add an explanation as to whether the company has past due debts and whether there is a risk that bank loans will not be able to be repaid when they are due. If so, detailed disclosure or risk warning is required.
According to iFinD data, from 2017 to 2019, Tianqi Lithium’s asset-liability ratio was 40.39%, 73.26%, and 80.88%, respectively. It has increased considerably since 2018 and, at the end of September 2020, its asset-liability ratio has risen again to 81.27%. It has reached a new high since its listing, and you can imagine the pressure of paying off your debt.
The key change in Tianqi Lithium’s growing debt ratio came in 2018. In May 2018, Tianqi Lithium announced that it intends to acquire 23.77% of the SQM Class A shares of Nutrien Group at a price of $ 65 per share, with a total transaction price of $ 4,066 million. This amount exceeded Tianqi Lithium’s total assets at the time. During the acquisition process, Tianqi Lithium’s own funds contributed only 17.8% and its cross-border financing loans reached US $ 3.5 billion.
At that time, the renewal of this US $ 3.5 billion loan was considered, of which US $ 2.3 billion will eventually have to be repaid by the end of November 2020, and US $ 1.2 billion will eventually have to be repaid. be redeemed at the end of November 2023. In January 2020, Tianqi Lithium allocated shares and redeemed $ 416 million. In other words, of the $ 2.3 billion that must be repaid, $ 1.884 billion remains. Although the borrower has extended Tianqi Lithium since then, the funds are only as of December 28, 2020.
On the occasion of “life or death”, Tianqi Lithium Industry has ushered in a new turning point. On December 8, 2020, Tianqi Lithium announced that its wholly owned subsidiary, TLEA, intends to introduce strategic investor IGO, a publicly traded Australian company through a capital increase and share expansion. IGO’s wholly owned subsidiary will contribute US $ 1.4 billion in cash to subscribe to TLEA. The recently increased share capital was US $ 304 million.
If the plan to introduce IGO goes smoothly, Tianqi Lithium’s credit pressure will be reduced significantly, from the original US $ 3.5 billion to the remaining US $ 1.884 million, and the pressure to repay the principal will also be transferred to 684 million US dollars by the end of 2022. And 1.2 billion dollars by the end of 2023.
However, while the alarm may be temporarily lifted, the biggest issue Tianqi Lithium faces remains how the company will resolve debt risk from now on.
