Wintime Energy Proposes Asset Sales to Repay Debt

Wintime Energy Co., the latest Chinese bond defaulter, announced Monday a plan to dispose of 23.8 billion yuan ($3.6 billion) of assets after the coal miner defaulted July 5 on a 1.5 billion yuan short-term bond.

The Wintime case continues a surge of defaults this year as the Chinese government’s crackdown on excess debt has led to a severe liquidity crunch for private companies.

Following a meeting with bondholders that lasted more than eight hours and didn’t break up before midnight last Friday, Wintime said the bondholders will vote on a repayment proposal at a meeting scheduled for Tuesday.

Wintime promised at the Friday session with creditors to “try its best” to pay the interest on bonds by Thursday and repay part of the principal within three months.

Wintime Chairman Wang Guangxi, who controls the company, agreed to bear unlimited joint and several liability for the defaulted bond.

A bondholder disclosed that the company proposed to use a coal mining project it owns as the collateral for a secondary pledge as part of the repayment proposal.

The project was already used as collateral in a 700 million yuan financing provided by policy lender China Development Bank (CDB), the company’s biggest creditor. But the bondholder said the project has a high underlying value and could enhance Wintime’s credibility as collateral.

The mining project, located in China’s western province Shaanxi, is part of the 23.8 billion yuan of assets Wintime proposed to sell to repay debt.

A person closed to the company said some of assets are used as collateral in other financing. But Wintime said CDB agreed to remove its lien if Wintime uses the capital raised to repay debt, according to participants of the bondholders meeting last Friday.

Other assets the company plans to sell include a petroleum and chemical project in Guangdong province, joint interest in a British nuclear power project and stakes in several investment funds.

Shanghai-listed Wintime, which specializes in coal and power production, has aggressively expanded into sectors ranging from shale gas, hotels, and logistics to horse racing and hospitals.

The company’s total assets increased by 54-fold in less than 10 years. As of the end of March, it had total assets of 107.2 billion yuan but total debt of 78.23 billion yuan, with its debt-to-assets ratio hitting 73%. The company’s annual revenue in 2017 was just 22.4 billion yuan with net profit of 867 million yuan.

As of June 29, Wintime also had 250 million yuan of unpaid loans to banks. The company said it’s negotiating with the banks on the loans.

Wintime’s major creditor banks include CDB, Minsheng Bank, Bank of China, the Postal Saving Bank and China Construction Bank.

At last Friday’s meeting, Wang told bondholders that CDB agreed to lead a creditor bank committee to discuss Wintime’s debt restructuring.