Viewpoint It is not only investors who have bought bonds who have lost confidence due to the debt storm, but also upstream and downstream suppliers, end consumers, etc. will lose confidence in the future of the crisis enterprise.
As for individuals, for example, China Fortune Land Development, which has announced a debt restructuring plan, the first thing following taking a key step in debt restructuring is to try to restore its credibility and restore market confidence.
Recently, China Fortune Land Development held the 2022 Spring Collective Commencement Conference. Nearly 80 residential projects in 33 regions across the country, including Jingnan, Jingdong, Nanjing, Hangzhou, Hefei, Zhengzhou, and Wuhan, will resume work simultaneously.
Wang Wenxue, Chairman of China Fortune Land Development, said at the meeting that with the joint efforts of all parties, China Fortune Fortune Land Development has achieved phased results in its liquidity risk resolution work, and will go all out to properly resolve liquidity risks and complete the task of guaranteeing and handing over properties.
This is a confidence-boosting press conference. What CFLD expects is for the market to see its ability to continue operating in the future.
According to Meng Jing, President of China Fortune Land Development, at the meeting, China Fortune Land Development has restored the order of production and operation of the company in the shortest possible time with the core goal of “effectively fulfilling the main responsibility and promoting the orderly development of the company”.
From the data point of view, CFLD has successfully resumed work and production for 148 projects and 21.54 million square meters in 2021, basically realizing full-scale resumption of work; it has successfully completed the delivery of 54 residential projects and nearly 50,000 residential units of regarding 5 million square meters in 2021.
“In 2022, the company will continue to overcome difficulties and ensure the delivery of nearly 80 residential projects and over 70,000 sets of projects with an area of 10 million square meters on schedule.” The company also announced the new year’s business goals of China Fortune Land Development. This part of the data is higher than that of 2021. There has been a considerable increase in the actual volume completed each year.
In addition to guaranteeing delivery, what was also publicized at the meeting was China Fortune Land Development’s determination to deliver goods with guaranteed quality. Wang Feng, vice president of Peacock City, made detailed work arrangements for the spring construction of the residential group, focusing on the work of securing and handing over houses, and put forward the work goals, standards and strategies of each line in the new year.
The four-word summary is “quality and quantity”. It is worth noting that the delivery of quality and quantity is actually only the most common part of the normal operation of housing companies. Financially healthy housing companies rarely focus on it as a publicity focus, but many stormy housing companies will use this to stabilize their business. Fang’s confidence.
There are data to show that in 2019, China Fortune Land Development was still a real estate company with a sales scale of 100 billion yuan. Its sales volume that year was 145.159 billion yuan, although it decreased by 11.21% year-on-year, but it still ranked 22 in the sales list of the opinion index that year. .
The time has come to 2020. Due to the rumors of China Fortune’s liquidity shortage in the market and various factors such as the freezing of the property market around Beijing, China Fortune’s annual sales fell below 100 billion yuan, and only completed 94.067 billion yuan.
What is even more difficult is that in 2021, China Fortune Land Development experienced its first debt default in January, causing its operating performance to freeze from the first quarter of 2021. According to the published data, it completed 7.229 billion yuan and 6.314 billion yuan in the first to third quarters respectively. 100 million yuan and 7.188 billion yuan, and the cumulative sales in the three quarters were 20.733 billion yuan.
In this way, a vicious circle is formed. Debt defaults lead to concentrated actions by creditors, resulting in a run, and no further financing in any form; also because of thunderstorms, the market loses confidence in it, and the sales end cannot be launched. The two most important things for enterprises. cash flow channels, that is, cash flow from operating activities and cash flow from financing activities are frozen.
According to Viewpoint New Media, since 2016, CFLD’s operating cash flow has continued to flow out. The interesting phenomenon is that following the thunderstorm, the outflow of CFLD’s operating cash flow has been greatly reduced.
However, this is not caused by the improvement of its cash flow situation, but a substantial reduction in investment intensity. At the same time, the amount of money collected from the sale of houses has also decreased significantly.
On the other hand, the cash flow that can be obtained from financing activities has also dropped sharply from the scale of tens of billions to tens of millions. This is undoubtedly draining all the “water sources” for a 100 billion-level company.
The good news is that China Fortune Land Development Co., Ltd. actively carried out debt restructuring, which made it the first to relax on the financing side. On December 9, 2021, China Fortune Land Development announced that following it disclosed the “Debt Restructuring Plan”, the creditor committee of financial institutions actively responded to the questions raised by the creditors of financial institutions regarding the “Debt Restructuring Plan”, and used emails in the near future. A plenary meeting of the debt committee was held by way of voting.
The core of the meeting was only one: voting on the “Debt Restructuring Plan”.
The result of the meeting is the biggest good news for CFLD in more than a year. Because the “debt restructuring plan” won 82 votes in favor, accounting for 71.93% of the total votes of all members of the debt committee.
According to the plan, CFLD’s 219.2 billion yuan of financial debts will be properly arranged in batches through the sale of assets, establishment of trusts, extension of financial debts, and gradual repayment through continuing operations following interest rate cuts.
First, regarding 75 billion yuan was collected from the sale of high-quality assets; second, regarding 50 billion yuan of debt was taken away from the sale of assets; third, regarding 35.2 billion yuan of priority financial debts were extended or repaid; fourth, regarding 57 billion yuan was paid in cash Yuan financial debt; fifth, set up trust beneficiary shares with assets of regarding 22 billion yuan such as holding properties; sixth, the remaining financial debt of regarding 55 billion yuan is undertaken by the company, extended, interest rate cut, and gradually repaid through follow-up business development.
The adoption of this plan has ushered in the most important breathing time for China Fortune Land Development. CFLD pointed out that following the signing of the agreement through the vote, it means that the company’s main financial liabilities will be extended for 5-8 years, which has won valuable time for the company’s subsequent recovery of hematopoiesis.
The precious respite time is now available to China Fortune Land Development, and the question then comes to how to restore the ability of hematopoiesis? Obviously, the direction that needs to be done is to restore the market’s confidence in it. The most practical move behind it is that the products can be delivered according to quality and quantity.
In order to boost market confidence, Wang Wenxue also came forward to emphasize: will go all out to complete the task of guaranteeing and handing over the house; overcome difficulties and properly resolve liquidity risks; persevere to ensure orderly production and operation.
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