The future of shareholder bankruptcy and reorganization is uncertain. St Zhongnan lost nearly 300 million yuan in the first three quarters.

category:Finance
 The future of shareholder bankruptcy and reorganization is uncertain. St Zhongnan lost nearly 300 million yuan in the first three quarters.


Bankruptcy and reorganization of controlling shareholders

Two failed auctions of equity

On September 23, a civil ruling put an end to the debt storm of Jiangyin Zhongnan Heavy Industry Group Co., Ltd. (hereinafter referred to as Zhongnan group), the controlling shareholder of St Zhongnan.

Referring to the impact of the bankruptcy and reorganization of controlling shareholders on listed companies, Jiang Han, an expert consultant of upstream finance and economics, told Securities Daily: in theory, if the bankruptcy of controlling shareholders is well isolated, it is not a big problem, but if there is a very large correlation between the two transactions, it is likely to have a greater impact.

Before the bankruptcy and reorganization, the maturing debt of Zhongnan group was on the red light. On September 7, the company announced to the public that Jiangsu Higher Peoples court publicly auctioned 71.4 million shares of the company held by Zhongnan group on Taobao judicial auction platform, accounting for 5.07% of the total shares of the company, in the case of breach of contract between Zhongnan group and Xiamen International Trust Co., Ltd. due to stock pledge type repo business.

Only three days later, the company announced that the peoples Court of Guannan County, Jiangsu Province publicly auctioned 269 million shares of the listed company held by Zhongnan group, accounting for 19.09% of the total shares of the company.

For a while, the position of controlling shareholder of Zhongnan group was in jeopardy. However, before the public auction date, Zhongnan group was adjudicated bankrupt by the court, and the court has withdrawn the public auction of shares on Taobao judicial auction platform.

According to the latest announcement, Zhongnan group holds 340 million shares of the company, accounting for 24.16% of the total share capital of the company. All the shares of the company held by Zhongnan group are subject to judicial freezing and waiting for freezing. Equity freeze will bring adverse factors to the overall bankruptcy reorganization, Jianghan told reporters.

The controlling shareholders are in debt, St Zhongnan is also in various disputes, and its subsidiaries have been auctioned twice. At the end of August, St Zhongnan announced that due to the case of contract dispute between the company and Ping An Trust Co., Ltd., Shenzhen intermediate peoples court held 100% equity of Shenzhen market value Interactive Technology Co., Ltd. (hereinafter referred to as Shenzhen value still) held by Taobao judicial auction platform public auction company, but the above matters ended with flow auction.

Coincidentally, according to the companys announcement on September 21, on the eve of the bankruptcy and reorganization of Zhongnan group, due to the case of debt dispute between Wang Xiaodong and Wang Xuedong, Zhongnan culture and Datang brilliant, some assets of Datang brilliant, a wholly-owned subsidiary of St Zhongnan, were auctioned by the third intermediate peoples Court of Beijing.

In late October, a second judicial auction was launched in Shenzhen, but the starting price of the auction was 25% lower than the initial price. The evaluation price of Shenzhen Wangshang is 60.7409 million yuan, the initial starting price is 42.5186 million yuan, the secondary starting price has directly decreased by more than 8 million yuan, and the starting price is 34.0149 million yuan. The reporter learned that the auction day of Shenzhen Wangshang was set from October 31 to November 1.

Illegal guarantee balance: RMB 1.041 billion

No new external borrowings in half a year

On August 27, 2018, St Zhongnan announced that the company has not fulfilled the internal approval decision-making procedures to issue commercial acceptance bills, external guarantees, capital occupation of controlling shareholders and actual controllers, etc. By the end of the third quarter of 2019, the balance of illegal guarantees was 1.041 billion yuan, accounting for 47.47% of the latest audited net assets.

In terms of capital occupation, all the capital of cultural capital of Central South Group illegally occupied has been returned to the listed company, and the interest of 20.6405 million yuan formed by illegally occupied cultural capital of Central South Group has not been returned. In addition, due to the judicial deduction of two illegal foreign guarantee litigation decisions, Zhongnan group is now again occupying 15.92 million yuan of new funds.

It is worth mentioning that in the first quarter of 2019, the cash received from borrowing in the companys cash flow statement was only 32 million yuan. As of the end of the third quarter of 2019, the cash obtained from the above items of the company was still 32 million yuan. Within half a year, the company has not obtained new external borrowings. The external borrowing and financing ability of listed companies has reached a very weak state. Said the industry insiders.

Media industry trend is better

Can South Central St return to spring

According to the data, the original stock name of St Zhongnan is Zhongnan heavy industry. In 2014, the company transformed from metal tube manufacturing to media industry. In May 2016, the stock abbreviation of the company was changed to Zhongnan culture. In August 2018, the company announced that it had not fulfilled the internal approval decision-making procedures to issue commercial acceptance bills, external guarantees, capital occupation of controlling shareholders and actual controllers, etc., and wearing hat changed into st Zhongnan.

In 2018, St Zhongnans performance suffered its first loss since listing, with a loss amount of 2.1 billion yuan. From the first three quarters of 2019, St Zhongnan failed to turn around, losing nearly 300 million yuan.

St Zhongnan said that the extreme shortage of working capital had a significant adverse impact on part of the companys production and operation, a large number of overdue debts increased the financial burden of the company, orders for machinery manufacturing business decreased significantly, related businesses in the film and television industry have suspended or cancelled the investment plan for new projects, new games have not been approved as expected, and the life cycle of old games has entered the end. According to Ouyang Yujian and Guo Xiaodong, analysts of Chuancai securities, since the resumption of the approval of the game in December 2018, the number of industrial issues has continued to be low, but the overall quality of new games has increased. After the industry rectification in 2018, the media industrys film and television drama review and game version approval gradually returned to normal, and the industrys overall profitability has a positive trend. In the overall trend of the industry, can st Central South spring back? Jiang Han told the Securities Daily: for the enterprise itself, a better macro market environment is indeed conducive to the development of the enterprise, but whether the enterprise itself can break through the impact of changes in internal management is the core issue of the enterprise. Source: responsible editor of Securities Daily: Yang qian_nf4425

St Zhongnan said that the extreme shortage of working capital had a significant adverse impact on part of the companys production and operation, a large number of overdue debts increased the financial burden of the company, orders for machinery manufacturing business decreased significantly, related businesses in the film and television industry have suspended or cancelled the investment plan for new projects, new games have not been approved as expected, and the life cycle of old games has entered the end.

According to Ouyang Yujian and Guo Xiaodong, analysts of Chuancai securities, since the resumption of the approval of the game in December 2018, the number of industrial issues has continued to be low, but the overall quality of new games has increased. After the industry rectification in 2018, the media industrys film and television drama review and game version approval gradually returned to normal, and the industrys overall profitability has a positive trend.

In the overall trend of the industry, can st Central South spring back? Jiang Han told the Securities Daily: for the enterprise itself, a better macro market environment is indeed conducive to the development of the enterprise, but whether the enterprise itself can break through the impact of changes in internal management is the core issue of the enterprise.