Recently, the reporter of "China Business Daily" learned from an interview that the Chongqing branch of Guangfa Bank recently cooperated with Minsheng International (00938. HK), a wholly-owned subsidiary, Chongqing Huangshi Land Co., Ltd. (hereinafter referred to as "Chongqing Huangshi"), was caught in a credit dispute of more than 1.2 billion yuan.
Previously, there were media reports that Chongqing Huangshi pointed out that the Chongqing branch of Guangfa Bank had withdrawn loans in advance. Considering that Chongqing Huangshi Loan has been in substantial default and has not reached the restructuring conditions, according to the contract between the two parties, the bank announced the early maturity of the loan on August 31, 2023, requiring it to repay the debt due in advance before September 3, 2023, and has filed a lawsuit with the court because the borrower has not returned it on time.
In addition, the Chongqing branch of China Guangfa Bank told reporters that the adjustment of the risk classification of Chongqing Huangshi loan "is based on the debtor's credit risk, financial asset quality, etc., in line with the principles of authenticity, timeliness, prudence and independence of risk classification, and also in line with regulatory regulations."
$1.2 billion dispute
Minsheng International recently announced that its indirect wholly-owned subsidiary, Chongqing Huangshi, certain wholly-owned subsidiaries of Chongqing Huangshi, and Hu Mourong, the controlling shareholder and executive director of Minsheng International, received a formal hearing notice from the Chongqing Chengdu-Chongqing Financial Court, and the hearing of the legal proceedings regarding the recovery of the outstanding principal amount of approximately RMB1.212 billion, the relevant interest and other related expenses from the receivable Chongqing Huangshi loan was held in the court on June 6, 2024.
According to the national enterprise credit information publicity system, Chongqing Huangshi was established in 1997, and its business scope is the development, construction, sale, leasing and property management of No. 77 Qingnian Road, Yuzhong District (YZ4-3-514 plot); engaged in hotel management services; Operating guest rooms, accommodations, swimming pools, lounges, etc. The shareholder of Chongqing Huangshi is Xinhui Investment (Group) Co., Ltd.
It is understood that Chongqing Huangshi, as the borrower, entered into a loan agreement dated March 31, 2020 with a financial institution, in relation to a loan with a principal amount of RMB 1.25 billion and a term from March 31, 2020 to March 30, 2035. The loan is secured by a mortgage on the property held by Minsheng International at No. 77 Qingnian Road, Yuzhong District, Chongqing Municipality, the PRC and a personal guarantee provided by Hu Mourong.
According to the announcement, since the beginning of 2023, Chongqing Huangshi has been negotiating with the lender to amend the loan agreement on terms more favorable to the Group, and has received positive feedback from the lender at a material time. Considering that the proposal to reduce the fixed interest rate under the existing terms of the loan agreement is currently under active negotiations, and as a strategy to expedite the negotiation process, Chongqing Huangshi has not repaid the interest in accordance with the terms of the loan agreement since the second quarter of 2023. Nevertheless, since the second half of 2023, Chongqing Huangshi has been actively negotiating with the lenders to resolve disputes and amend the loan agreement, and is optimistic about the outcome of the negotiations in light of the lenders' continuous feedback during the negotiation process.
The reporter learned from the investigation that the above-mentioned financial institutions specifically refer to the Chongqing branch of Guangfa Bank.
Minsheng International stated that since the Group had carried on its business operations (including the management and operation of the Property) in all material respects after the default of the loan agreement, the Directors did not consider that the default had any imminent material adverse impact on the Group's business operations. If the court decides in favour of the lender, Chongqing Huangshi will be required to repay the amount determined by the court to the lender within a specified period of time as set out in the judgment. If Chongqing Huangshi fails to repay the judgment debt on time, the lender may apply to the court to enforce the property rights.
From the perspective of the mortgage situation, the announcement shows that after considering the financial performance and financial position of Minsheng International, in particular, the draft preliminary valuation of the property by an independent professional valuer using a comparable method on March 31, 2024 of approximately RMB2.21 billion and the undrawn loan financing of approximately HK$600 million provided by Mr. Yu Hu, the Directors believe that Minsheng International will have sufficient financial resources to resolve the dispute.
The reporter confirmed with Minsheng International on the specific situation of the loan, and sent an email to the company's official website and annual report mailbox, but the other party did not answer the call many times, and did not receive a reply by press time.
Previously, there were media reports that Chongqing Huangshi pointed out that the Chongqing branch of Guangfa Bank had withdrawn loans in advance. The reporter confirmed with Chongqing Huangshi about the loan, but did not receive a reply from the other party as of press time.
China Guangfa Bank said that the operation was compliant
The Notice on Strengthening Financial Support Measures to Help the Development and Growth of the Private Economy jointly issued by the People's Bank of China and the State Administration of Financial Supervision in November 2023 emphasizes that it is necessary to start from the characteristics of the financing needs of private enterprises and strive to smooth diversified financing channels such as credit, bonds, and equity. Banking financial institutions should increase the support of first loans and credit loans, actively carry out financial services for industrial chain and supply chains, take the initiative to do a good job in the capital continuation services of private enterprises, and do not blindly suspend loans, pressure loans, draw loans, and cut off loans, and at the same time do a good job in promoting development and preventing risks.
In response to Chongqing Huangshi's borrowing, did China Guangfa Bank draw loans as Chongqing Huangshi alleged?
Regarding the specific situation of the loan, the Chongqing branch of Guangfa Bank told reporters that Chongqing Huangshi applied for a loan at the bank on March 31, 2020, and had temporary interest arrears in September and December 2022 respectively. In order to support it to get out of the predicament, the bank took the initiative to implement two consecutive interest rate cuts for Chongqing Huangshi, and changed the interest rate from a fixed interest rate to a floating interest rate, and lowered the corporate loan interest rate from 7% to 5.3% in two installments on September 28 and December 19, 2022, which is estimated to save the enterprise a total of 163 million yuan in interest expenses.
Subsequently, the Chongqing branch of China Guangfa Bank said that in April 2023, the company's operation did not meet expectations, there was uncertainty in the first source of repayment, and the collateral and account were seized and frozen due to economic disputes with the construction unit.
The reporter noted that the Fifth Intermediate People's Court of Chongqing Municipality issued a consumption restriction order in January 2023, indicating that on January 18, 2023, the application of the applicant China Railway Construction Engineering Group Co., Ltd. for the enforcement of the Chongqing Huangshi construction project contract dispute case was filed for enforcement, because Chongqing Huangshi failed to perform the payment obligations determined by the effective legal documents within the period specified in the enforcement notice, in accordance with Article 262 of the Civil Procedure Law of the People's Republic of China and the Several Provisions of the Supreme People's Court on Restricting High Consumption and Related Consumption of the Executed Person The provisions of Article 1 and Article 3 stipulate that Chongqing Huangshi shall take measures to restrict consumption, and restrict Chongqing Huangshi and Chongqing Huangshi's legal representative, Li, from carrying out some high-consumption and non-essential consumption behaviors for life and work.
"In June 2023, Chongqing Huangshi once again (based on the arrears in September and December 2022) was in arrears, and our bank and the enterprise negotiated a solution for many times but did not reach an agreement." China Guangfa Bank Chongqing Branch said, "In August 2023, the borrower continued to default on interest and failed to repay on time for many quarters since 2022, considering that its primary source of repayment was seriously insufficient, the value of the collateral was greatly depreciated, the expected credit loss exceeded 50% (this factor is used as a condition for adjusting suspicious), and the risk level warning signal was not lifted, according to the rules and regulations of the Bank and the relevant regulatory regulations, our bank adjusted the risk classification of Chongqing Huangshi to 'suspicious'. ”
From the perspective of basis, China Guangfa Bank said that the Measures for the Risk Classification of Financial Assets of Commercial Banks (China Banking and Insurance Regulatory Commission, Order No. 1 of the People's Bank of China in 2023) clearly stipulates that the analysis of the debtor's primary source of repayment should be strengthened, focusing on the assessment of the debtor's performance ability, focusing on the debtor's financial status, willingness to repay, and repayment record; At the same time, according to Article 24 of the Measures for the Risk Classification of Financial Assets of Commercial Banks, "these Measures are the minimum requirements for the risk classification of financial assets, and commercial banks shall improve the classification system and refine the classification methods according to the actual situation, but shall not be lower than the standards and requirements proposed in these Measures", "the above-mentioned risk classification assessment of financial assets of our bank is entirely based on the credit risk of the debtor, the quality of financial assets, etc., and conforms to the principles of authenticity, timeliness, prudence and independence of risk classification, as well as regulatory provisions".
In terms of taking legal measures, the Chongqing branch of China Guangfa Bank told reporters that as of August 31, 2023, Chongqing Huangshi has failed to repay the loan at the agreed time in the contract for several quarters since 2022, has been in arrears of interest since June 2023, and has greatly depreciated the value of the collateral and has not supplemented the collateral with the bank. "Considering that Chongqing Huangshi Loan has defaulted materially and has not reached the restructuring conditions, in order to maintain the safety of financial assets, our bank has taken necessary legal measures in accordance with laws and regulations, and according to the contract between the two parties, our bank announced the early maturity of the loan on August 31, 2023, requiring it to repay the debts due in advance before September 3, 2023, and because the borrower failed to repay on time, our bank filed a lawsuit with the Chengdu-Chongqing Financial Court in September 2023."
Tianyancha shows that the financial loan contract dispute between Chongqing Branch of Guangfa Bank and Chongqing Huangshi, Chongqing Wanfu Commercial Management Co., Ltd., Chongqing Wanduofu Hotel Management Co., Ltd., and Chongqing Huangshi Land Co., Ltd. Marriott Executive Apartment Hotel Branch was heard in June this year.
According to the national enterprise credit information publicity system, Chongqing Huangshi is a shareholder of Chongqing Wanfu Commercial Management Co., Ltd. and Chongqing Wanduofu Hotel Management Co., Ltd.
The reporter called Chongqing Huangshi and sent the company's relevant personnel email for confirmation on the relevant content described by the bank, but did not receive a reply as of press time.