Debt-Ridden Tunghsu Explains Why It Was Unable to Withdraw Its Own Cash
What’s new: Shenzhen-listed Tunghsu Optoelectronic Technology Co. Ltd. on Tuesday said it had failed to withdraw 7.9 billion yuan ($1.1 billion) of deposits put into a finance subsidiary due to the subsidiary’s liquidity issues, in a filing (link in Chinese) in response to the Shenzhen Stock Exchange’s inquiry.
At the end of last year, Tunghsu Optoelectronic, a maker of electronic display panels, reported about 11.6 billion yuan in outstanding money funds. Among the funds, about 7.9 billion yuan was deposited into a finance company jointly set up by Tunghsu Optoelectronic and its controlling shareholder, Tunghsu Group Co. Ltd., but the withdrawal of the money was restricted as the finance company faced a liquidity crisis, Tunghsu Optoelectronic claimed.
Caixin previously learned from a source at Tunghsu Optoelectronic that the company’s money stored at the finance company had actually been taken by debt-ridden Tunghsu Group to pay its debt.
Tunghsu Optoelectronic on Tuesday explained that the liquidity problems of the finance company have yet to be resolved, and it could only withdraw 1.5 billion yuan, 3 billion yuan and 3.4 billion yuan in installments over a three-year period.
What’s the background: Tunghsu Optoelectronic sent jitters through the market in November by missing a payment on 1.87 billion yuan of notes, just weeks after the company reported having more than 18 billion yuan in cash.
In the first quarter of this year, Tunghsu Optoelectronic reported 1 billion yuan in revenue, representing a 73% decline year-on-year, and recorded a net loss of 332 million yuan, a massive drop from a net profit of 431 million yuan in the same period last year, according to the company’s latest quarterly report (link in Chinese).
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