On November 28, 2016, Binjiang group agreed to purchase the beneficial rights of the trust under Everbright trust - Anyuan group single fund trust with RMB 860 million, and to provide another fund support of RMB 300 million to Anyuan holdings. The total financing support of RMB 1.16 billion provided to Anyuan Holding Co., Ltd. can be directly transferred to a part of the project land price that Binjiang group shall bear.
However, the plan cannot keep up with the changes. In 2017, the old reform policy of Shenzhen changed, which led to the old reform project of Binjiang group and Anyuan Holding Co., Ltd. could not be carried out according to the normal plan. On the other hand, the actual controller of Anyuan Holding Co., Ltd. was investigated for criminal responsibility for the unit crime. Double faced attack, Binjiang group finally had to withdraw from Shenzhen market.
This defeat left Binjiang group with the problem of how to recover the 1.16 billion yuan invested.
March into Shenzhen and encounter Waterloo
In 1992, Binjiang group started its business in Hangzhou by virtue of the reconstruction of the old city, and then established its foothold in Zhejiang. Out of the base camp, Binjiang group took a fancy to Shenzhen.
In 2016, Binjiang group and Anyuan holding established a joint venture company, Shenzhen Binan, to jointly develop the old reform project of Anfeng Industrial Zone, Longhua District, Shenzhen. The project is operated and consolidated by Binjiang group, and Anyuan holding is responsible for reporting to relevant departments according to Shenzhen urban renewal policy, and approving the project company as the only urban renewal and reconstruction implementation subject of the plot, of which Binjiang group holds 70% and Anyuan holding 30%.
At that time, Binjiang side believed that this cooperation was conducive to the companys brand development, and was a favorable exploration for the company to obtain land reserves from the first tier cities. The board of directors of the group unanimously approved this cooperation.
According to the public information, the land area of the project is about 100000 square meters. According to the cooperation agreement, Binjiang group will pay more than 8 billion yuan for the land according to the 70% equity ratio, with the floor price of 28000 yuan / M2 as the price.
On the other hand, the Shenzhen market at that time, affected by the liberalization of the industrial reform policy, the industrial reform projects became the hot spots in the eyes of developers. In 2016, according to statistics of the world bank, there will be 30 million square meters of industrial land in Shenzhen in the next 8-10 years. Binjiang group is trying to catch up with the wave of industrial reform in Shenzhen.
However, the plan cant keep up with the changes. In 2017, Shenzhen issued new regulations in the old reform, strictly controlling the industrial housing reform and industrial business reform. According to the planning requirements of the government, 30% of commercial apartments are included in the old renovation project of Anfeng industrial zone jointly developed by Binjiang group and Anyuan holdings. As the land use cannot be changed, the project has to press the pause button.
In March 2018, Binjiang group announced that the old reform project of Anfeng Industrial Park has not yet completed the preliminary project approval procedures. Subsequently, Binjiang group withdrew from the old reform project. After quitting, how to recover 1.16 billion yuan of original investment has become a problem.
In April 2018, Chen Yuyuan, the actual prosecutor of Anyuan holdings, was sentenced to four years imprisonment for bribery, and Anyuan holdings lost the ability to perform the contract.
According to the annual report of Binjiang group in 2019, the loan of RMB 1.16 billion from Anyuan holding by Binjiang group in November 2016 has not been recovered due to the projects failure, so in 2019, Binjiang group accrued RMB 724 million in bad debt reserves.
Reply to inquiry letter: bad debt provision is sufficient and reasonable
On June 12, Binjiang group issued a notice on the reply to the inquiry letter of Shenzhen Stock Exchanges 2019 annual report.
Shenzhen stock exchange requires Binjiang group to explain whether it has fulfilled the corresponding review procedures and information disclosure obligations when lending large amount of money to Anyuan holding company, and explain whether the above borrowing decision is prudent enough in combination with the loan conditions, performance guarantee measures and other matters, and explain the rationality of the loan in combination with the specific situation of the proposed cooperation project.
In response, Binjiang group replied that the companys above-mentioned borrowing of RMB 1.16 billion fully considered the potential value of the project, the existing status of the project, the performance of the contract, the rights and obligations of all parties to the cooperation and other specific conditions of the project, aiming to more effectively promote the progress of the project, so the company believed that the borrowing decision was prudent and reasonable.
Binjiang group said that as of December 31, 2019, the companys expected recoverable amount of RMB 1.16 billion of creditors rights to Anyuan holding company was about RMB 436 million according to the principle of prudence, and the company accrued about RMB 724 million of bad debt reserves according to the difference between the expected recoverable amount and the total creditors rights, which was sufficient and reasonable.
Yan Yuejin, a well-known real estate analyst, said in an interview with the China times that the potential risk of foreign real estate enterprises entering Shenzhens old reform is relatively high. Many village groups of old reform projects in Shenzhen didnt withdraw completely, which may lead to high cost of old reform. In addition, similar to Binjiang group, the presence of foreign real estate enterprises in Shenzhen has increased many uncertain factors, and the current investment can not be fully recovered, which will also bring greater capital pressure to the company.
Zhang Hongwei, chief analyst of Shanghai Tongce Research Institute, told China times that in terms of the whole old reform, Dawan district still has a good opportunity, and many foreign real estate enterprises have set up a special old reform team for Dawan district. But in the layout of Dawan District, only when we are familiar with the market environment, partners and other aspects can we do this well.
In 2017, Binjiang group once again took over the old reform project in Shenzhen, spent 485 million yuan to acquire 48% equity of Shenzhen Aiyi real estate, and planned to jointly develop the project of dalanglangkou village, with a construction area of about 294000 square meters. According to the project development situation announced in the 2019 annual report, the construction of Shenzhen Langkou workshop and Shenzhen langkouwu village is planned to start in August and December 2020 respectively. The reporter of Huaxia times called and sent emails to the office of the Secretary of the board of directors of Binjiang group for many times on whether the loss caused by the cooperation between Binjiang group and Anyuan holdings would affect the cash flow of the company, and the subsequent layout in Shenzhen or other regions, but as of the time of publication, no reply had been received. Editor in charge: Zhang Bei editor in chief: Zhang Yuning source: China Times editor in charge: Zhong Qiming_ NF5619
In 2017, Binjiang group once again took over the old reform project in Shenzhen, spent 485 million yuan to acquire 48% equity of Shenzhen Aiyi real estate, and planned to jointly develop the project of dalanglangkou village, with a construction area of about 294000 square meters. According to the project development situation announced in the 2019 annual report, the construction of Shenzhen Langkou workshop and Shenzhen langkouwu village is planned to start in August and December 2020 respectively.
The reporter of Huaxia times called and sent emails to the office of the Secretary of the board of directors of Binjiang group for many times on whether the loss caused by the cooperation between Binjiang group and Anyuan holdings would affect the cash flow of the company, and the subsequent layout in Shenzhen or other regions, but as of the time of publication, no reply had been received.
Editor in charge: Zhang Bei editor in chief: Zhang Yuning