Indebtedness, guarantees and other contingent obligations
Hong Kong IPO disclosure precedents · 78 companies, 82 items
high borrowings or gearing, covenants, guarantees given or received (including related-party guarantees to be released on listing), financial guarantee contracts, shortfall-funding or repurchase obligations
During the Track Record Period, Mr. Wang Zhongshan and Ms. Zhang Xiuqin (the ‘‘CP Guarantors’’) had been providing personal guarantees/mortgages (the ‘‘CP Guarantees’’) as security for certain of our Group’s banks loans, acceptance bills, lease financing and gold loans (collectively, the ‘‘Guaranteed Loans’’), and all of such CP Guarantees will be terminated and the relevant banks loans, acceptance bills and gold loans will be guaranteed by the Company and/or members of our Group upon Listing.
Summary · p. 30
As of the Latest Practicable Date, we have received consent letters from all lenders of our Guaranteed Loans, pursuant to which they agreed in principle to replace our CP Guarantees with guarantees/mortgages and/or patent rights to be provided by our Group upon Listing.
For the amount raised from limited partners, we have contractual obligation to settle the liabilities with the limited partners at the fund's prevailing fair value and the management designates such obligation as other financial liabilities at fair value through profit or loss.
Financial Information · p. 297
As at 31 December 2021, 2022 and 2023, 30 April 2024 and 31 July 2024, our other financial liabilities at fair value through profit or loss amounted to nil, RMB1,580.8 million, RMB1,346.7 million, RMB1,174.0 million and RMB1,067.2 million, respectively.
The Directors confirmed that there were breaches of covenants under loan agreements during the Track Record Period.
Financial Information · p. 344
However, during the Track Record Period, the Group’s gearing ratio fell short of such requirement of the loan covenant under the loan agreements.
Financial Information · p. 344
Additionally, the Group is also subject to other restrictive financial loan covenants, which may be material to the Group, under its certain bank borrowings during the Track Record Period and up to 30 April 2024.
In addition, certain of our related parties provided guarantees and counterguarantees in connection with our interest-bearing bank borrowings (the "Guaranteed Loans") up to RMB137.5 million, RMB138.0 million and RMB129.0 million as of December 31, 2021, 2022 and 2023, respectively.
Financial Information · p. 347
If such consent letters could not be obtained, all amounts under the Guaranteed Loans will be repaid before Listing.
Our Group recorded a decrease in our net current assets from HK$75.0 million as at 31 March 2022 to HK$47.9 million as at 31 March 2023, which was primarily attributable to (i) the loan to BC Mortgage, being a joint venture of our Controlling Shareholder and our related party, which was accounted for non-current assets; (ii) the reclassification of Trans World Austria's bank borrowing from non-current liabilities to current liabilities due to its breach of the term of a bank borrowing, which primarily related to debt service cover ratio.
Financial Information · p. 356
During the six months ended 30 September 2023, the bank has waived its rights as at 31 March 2023 to demand immediate payment after 31 March 2023.
Financial Information · p. 356
Apart from above pledged assets, our Group also pledged the entire shareholding of Trans World Austria for the bank borrowings as at 31 March 2021, 2022, 2023 and 30 September 2023.
As at 31 March 2021, 2022 and 2023, 30 November 2023 and 31 January 2024, we had financial guarantee contracts not recognised in the financial statements amounted to RMB191.0 million, nil, nil, nil and nil, respectively, which represented the amount of guarantee given to the banks in connection with the bank facilities granted to a related company and a joint venture, namely, Liaoning Migao and Baoqing Migao.
Financial Information · p. 438
As at 31 March 2021, 2022 and 2023 and 30 November 2023, certain related parties of our Company provided financial guarantees in respect of bank facilities granted to our Group amounted to RMB547.0 million, RMB374.0 million, RMB280.0 million and RMB130.0 million, respectively.
Financial Information · p. 434
Our Directors confirm that all guarantees provided to/by the related parties of our Group will be fully released before the Listing.
As of June 30, 2023, we had bank borrowings of RMB10.0 million which bears an interest rate of 4.5% per annum and is guaranteed by certain of our Controlling Shareholders, namely, Mr. Wang and Ms. Dou, which will be released prior to the Listing.
As of December 31, 2020, 2021, 2022 and the six months ended June 30, 2023, we had bank and other borrowings of RMB1,964.3 million, RMB2,219.6 million, RMB2,391.5 million and RMB2,417.9 million, respectively.
Financial Information · p. 293
As of December 31, 2020, 2021, 2022 and June 30, 2023, and our current ratio was 0.21, 0.20, 0.84 and 0.83, respectively.
Financial Information · p. 293
Our focus will be on the continued prudent management and reduction of our debt balances.
In FY2020, our Group has provided corporate guarantees amounted to RMB50.0 million in favour of a bank in the PRC for banking facilities obtained by Baiheng. Such guarantees had been released in December 2021.
Financial Information · p. 402
The banking facility in the amount of RMB30.0 million obtained in August 2022 which was guaranteed by Dahedong, Baiheng, Mr. Zhou Shufeng and his spouse will not be released prior to the Listing.
Financial Information · p. 402
We intend to utilise internal resources to repay certain bank loan or utilise net proceeds from the Global Offering amounting to approximately 12.6% or HK$33.6 million (RMB30.0 million) and such guarantees will be released upon repayment of the bank loans, for details please refer to the section headed ‘‘Future plans and use of proceeds — Use of proceeds’’ in this prospectus.
Our borrowings (tax loans excluded) remained stable at approximately HK$306.0 million, HK$291.0 million, HK$282.0 million and HK$252.0 million as of December 31, 2020, 2021 and 2022 and May 31, 2023, respectively, which were for our working capital.
Financial Information · p. 253
As such, the expansion of our business will be limited by our ability to obtain adequate funding.
Financial Information · p. 253
Our Directors confirm that as of the Latest Practicable Date, there was no material covenant on any of our outstanding debt and there was no breach of any covenant during the Track Record Period and up to the Latest Practicable Date.
In addition, Guohong Refire has undertaken to return the funds invested by Yunfu Rongda while our Company and Shanghai Refire, responsible for 51.0% and 49.0%, respectively, agreed to guarantee the repayment of Yunfu Rongda's investment funds and its fixed return.
Business · p. 288
Our net other losses increased by 453.2% from RMB3.5 million for the year ended 31 December 2021 to RMB19.5 million for the year ended 31 December 2022 mainly as a result of the increase in derivative financial instruments at fair value through profit or loss representing Guohong Refire's obligation to repay the investment fund of RMB77.8 million together with Shanghai Refire, responsible for 51.0% and 49.0%, respectively.
Financial Information · p. 433
We returned the RMB39.7 million investment to Yunfu Rongda in June 2023.
As of 31 December 2020, 2021 and 2022 and 31 May 2023, the guarantees provided by related parties amounted to RMB3,214.4 million, RMB3,755.1 million, RMB4,038.6 million and RMB4,312.7 million, respectively.
Financial Information · p. 401
The guarantees provided by our Controlling Shareholders will be released before Listing.
Financial Information · p. 401
During the Track Record Period, we had contingent liabilities of RMB76.9 million as at 31 December 2020, which reflects the outstanding amount of certain bank loans made to contract farmers which we had guaranteed.
In comparison with the EPC contracting models, the PPP model involves greater exposure to financing risks of the project, and the capital requirements are generally higher under this model.
Business · p. 285
We finance up to 80% of our investment commitment in a PPP project through loans, and the remainder with our own cash or equity financing.
Business · p. 286
In addition, PPP projects typically require us to make significant initial investment using our own cash and external financing and this creates cashflow mismatch as we can only receive payments, as service fees, after completion of construction phase throughout the operation period which usually have a span of 10 to 29 years.
As of December 31, 2020, 2021, and 2022, and April 30, 2023, our gearing ratio was 171.8%, 153.9%, 152.0%, and 154.9%, respectively.
Business · p. 264
During the Track Record Period, taking into account our liquidity position and capital needs, we acquired intralogistics equipment by using our own funds, as well as by raising external financings, including bank loans and financial lease arrangements from the financial institutions.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our borrowings amounted to RMB1,156.0 million, RMB1,382.8 million, RMB1,713.4 million and RMB1,857.9 million, respectively, and our weighted average effective interest rate of borrowings was 8.5%, 8.5%, 8.6% and 8.5%, respectively.
Financial Information · p. 336
However, we had a negative net liquidity gap for the category of on demand and less than one year of RMB268.1 million, RMB132.5 million, RMB74.7 million and RMB32.8 million as at 31 December 2020, 2021, 2022 and 30 June 2023, respectively.
Business · p. 235
According to CIC, cash flow mismatch with negative net liquidity gap and negative maturity gap is an industry norm in the automobile finance leasing industry.
As at 31 December 2020, 2021 and 2022 and 30 April 2023, bank and other loans of RMB31.8 million, RMB0.1 million, RMB0.1 million and RMB3.1 million were guaranteed by the Shareholders of our Group of which will be released or fully repaid before the Listing.
Our current and non-current borrowings amounted to RMB1,240.9 million, RMB1,605.3 million and RMB1,393.3 million as of December 31, 2020, 2021, and 2022, respectively.
Business · p. 199
As of December 31, 2020, 2021, and 2022, respectively, RMB1,162.4 million, RMB1,408.1 million and RMB1,369.3 million of our secured and/or guaranteed borrowings were guaranteed by Dr. Ji and Mr. Zhang.
Financial Information · p. 326
We do not expect such guarantees to be released upon listing, as our Directors are of the view that premature discharge of the such guarantees would be impractical and unduly onerous to our Group and would not be in the best interests of our Group and our Shareholders, considering that early replacement or discharge of such secured borrowings would require renegotiation of the terms with the relevant banks, and that the renegotiation would take considerable time, which may affect our normal operation.
As of December 31, 2020, 2021 and 2022, our interest-bearing bank and other borrowings amounted to RMB7,817.5 million, RMB17,697.8 million and RMB21,212.1 million.
Financial Information · p. 338
As of December 31, 2022, we had banking facilities of RMB38,216 million in aggregate from banks and finance lease companies, among which RMB10,884 million were unutilized and unrestricted.
Financial Information · p. 338
The level of our indebtedness and the amount of our interest payments could limit our ability to obtain the necessary additional financing or obtain favorable terms for the financing for future capital expenditures and working capital.
For FY2020, FY2021 and FY2022, Mr. Sun and Mrs. Sun had provided personal guarantee to secure the bank borrowings, amounted to RMB31.0 million, RMB54.8 million and nil, respectively.
Financial Information · p. 391
All guarantees provided by Mr. Sun and his spouse for our banking borrowings had been released since August 2022.
As of December 31, 2019, 2020 and 2021 and September 30, 2022, we had bank loans guaranteed and/or secured by related parties of our Group or their owned properties of US$20.1 million, US$25.0 million, US$45.8 million and US$23.9 million, respectively.
Financial Information · p. 344
Our Directors confirm that the guarantees provided by our related parties will be released or replaced by corporate guarantees to be provided by our Group upon the Listing.