Jinke Properties Restructuring Watch: Who Is the White Knight Leveraging a $3.4 Billion Investment to Tackle Over $86 Billion in Debt? (AI Translation)
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文｜财新 王娟娟
By Caixin's Wang Juanjuan
【金融我闻/王娟娟】作为首个进入司法破产重整的千亿房企，金科股份（ 000656.SZ ）所剩时日无多。金科股份及其核心子公司重庆金科在2024年4月正式进入重整程序，按照《破产法》的时限要求，最晚需要在2025年1月提交重整计划草案。
[Financial Insights/Wang Juanjuan] Jinke Property Group (000656.SZ), the first real estate developer with assets totaling over 100 billion yuan to enter judicial bankruptcy reorganization, is running out of time. Jinke and its core subsidiary Chongqing Jinke are set to formally enter the reorganization process in April 2024. According to the time limits stipulated by the Bankruptcy Law, they must submit a draft reorganization plan by January 2025 at the latest.
据相关债权人透露，金科股份的重整计划已大致确定，计划主要以信托份额和债转股偿债，小额清偿线设置在5万元，普通债权清偿率或将锁定在个位数。财新获得的信息显示，金科股份有4800多家债权人，共申报债权逾862亿元，其中甚至包含了十几亿元的消费者购房款债权。
According to relevant creditors, Jinke Property Group's restructuring plan has been largely finalized. The plan mainly involves debt repayment through trust shares and debt-to-equity swaps. The threshold for small-scale repayments is set at 50,000 yuan, with the general debt repayment rate likely to be in the single digits. Information obtained by Caixin shows that Jinke Property Group has over 4,800 creditors, with total declared debts exceeding 86.2 billion yuan, including consumer home purchase funds amounting to several billion yuan.
金科股份在2022年上半年债务逾期，危机拉开之后股价败退，一度跌至1元退市红线。为保住上市地位，金科股份最初寄希望于寻找当地国资纾困，落空后不得不在2023年开始谋划重整保壳（参见财新我闻2023年2月14日《全市场谋划展期 “西南王”金科如何化债存活》）。
Jinke Property incurred debt defaults in the first half of 2022, and once the crisis unfolded, its stock price plummeted, at one point falling to the 1 yuan delisting threshold. To maintain its listing status, Jinke Property initially hoped to find local state-owned assets for a bailout. After these efforts came up short, it had to resort to planning a restructuring in 2023 to preserve its shell status (see Caixin's Woke News on February 14, 2023, "Market-Wide Restructuring Plans: How Will 'The King of the Southwest' Jinke Survive Debt Woes").
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- Jinke Property Group, a major real estate developer, is undergoing a judicial bankruptcy reorganization with a reorganization plan due by January 2025.
- The company faces over 86.2 billion yuan in debts with a restructuring plan involving debt-to-equity swaps and trust shares. A consortium led by Shanghai Pinqi and Beijing Tianjiao has committed over 3.378 billion yuan for financial support.
- The restructuring, involving nearly 4,800 creditors, aims to reduce debt and improve operational quality, though creditors anticipate significant losses with repayment rates potentially under 10%.
Jinke Property Group, a significant player in China's real estate sector, is navigating through a judicial bankruptcy reorganization process, marking it as the first real estate developer with assets exceeding 100 billion yuan to undertake such a procedure. This process is set to begin in April 2024 and requires the submission of a restructuring plan by January 2025. The plan largely revolves around debt settlements through trust shares and debt-to-equity swaps, with over 4,800 creditors and declared debts surpassing 86.2 billion yuan. The company faced debt defaults starting in early 2022, leading to a steep decline in stock value, which prompted efforts to maintain its listing status through restructuring attempts. The delay in proposing a restructuring plan has been partly due to challenges in securing a "white knight" investor to lead financial rescue efforts. [para. 1]
Efforts to secure investors led to a partnership with a consortium of companies promising over 3.378 billion yuan in financial support. However, doubts linger regarding the source of these funds, indicating potential reliance on financial leverage. The complexity of Jinke's financial predicament, including over 63.3 billion yuan in general claims, complicates the restructuring process. The restructuring aims to alleviate debt burdens and phase out underperforming assets, though expectations suggest ordinary creditors could see a repayment rate below 10%. Jinke Properties has a strategic goal of restructuring to exclude certain subsidiaries while focusing on key business operations and assets. [para. 2][para. 3]
Jinke's journey began in 1998, growing rapidly by 2018 to enter the elite group of trillion-yuan real estate companies. Yet, the industry downturn in subsequent years saw highly leveraged companies like Jinke struggling with defaults, revealing liabilities exceeding assets against total assets of approximately 200 billion yuan by September 2024. The restructuring, aiming to set a precedent for large real-estate companies, involves converting significant debt portions into trust shares, albeit at terms unfavorable compared to market conditions, as seen in other domestic corporate bankruptcy scenarios. Housing payment claims further complicate the restructuring, demanding prioritization in settlement amid significant sector scrutiny. [para. 4][para. 5]
Among interested investors, the Shanghai Pinqi consortium was ultimately selected for the restructuring process, outmaneuvering state-owned enterprises and other contenders. Beijing Pingqi, a special asset management platform founded by industry veterans, spearheads the consortium, showcasing the real estate and financial connections that could support Jinke in restructuring. Despite reservations about their financial strength to independently fund the full investment, the consortium plans to make structured investments to mitigate Jinke's operational challenges. Additional backing from financial players like Feng Biao and his organization Orient Group indicates a complex layer of investment efforts aimed at stabilizing Jinke's financial standing. [para. 6][para. 7]
Jinke's restructuring could position it as a pioneering model amid prevalent industry challenges, especially as other distressed real estate firms face potential judicial restructurings. With the completion of projects and deliveries as a priority, many companies are expected to follow Jinke's path through bankruptcy proceedings. Judicial restructuring stands as a crucial opportunity for Jinke to eliminate liquidity risks and enhance operational quality by focusing on strategic business sectors, including investment management and development services. This process could serve as a litmus test for restructuring larger real estate entities in severe financial distress, amid broader industry expectations for similar scenarios across the real estate sector. [para. 8][para. 9]
- Jinke Property
- Jinke Property, a major private real estate firm in Chongqing, faces judicial bankruptcy reorganization due to its severe debt crisis. With over 4,800 creditors claiming more than 86.2 billion yuan in debts, the company plans to settle debts through debt-to-equity swaps and trust shares. Despite previous efforts to find investors, Jinke has now secured a restructuring investment deal worth over 3.378 billion yuan led by the Shanghai Pingqi and Beijing Tianjiao consortium.
- Shanghai Pinqi Management Consulting Co., Ltd.
- Shanghai Pinqi Management Consulting Co., Ltd. is involved in the restructuring of Jinke Co., partnering in a consortium to invest over 33.78 billion yuan. It is a fully-owned subsidiary of Beijing Pinqi Management Consulting Co., founded by Feng Lun, Shan Dawei, and others as a real estate investment platform. Shanghai Pinqi has no substantial revenue since its establishment in 2022 and its shareholders include notable figures like Feng Lun and Shan Dawei.
- Beijing Tianjiao Lvyuan Real Estate Development Co., Ltd.
- Beijing Tianjiao Lvyuan Real Estate Development Co., Ltd. is involved in the restructuring investment of Jinke Properties. It is seen as a lesser-known entity but is believed to have a significant backer, "Dongfang" related to capital player Feng Biao. The company plays a pivotal role in providing funding support for Jinke's restructuring plan, carrying the responsibility of guaranteeing the payment of some investment funds.
- Beijing Pinqi Management Consulting Co., Ltd.
- Beijing Pinqi Management Consulting Co., Ltd. is a real estate investment platform established by Feng Lun, Shan Dawei, Zhang Yong, and former China Merchants Bank president Ma Weihua, among others. It operates under a partnership system and is the 100% shareholder of Shanghai Pinqi. Beijing Pinqi, through Shanghai Pinqi, is involved in the restructuring investment of Jinke Co.
- China Merchants Bank
- China Merchants Bank's former president, Ma Weihua, is mentioned as a co-founder of the real estate investment platform Beijing Pingqi Management Consulting Co., which is involved in the restructuring of Jinke. Ma Weihua holds the position of honorary chairman at this platform.
- Xinyuan China
- Xinyuan China is mentioned in the article as a co-founder of the Beijing Product Management Consulting Company, an investment platform involved in the restructuring of Jinke Co. The company was founded by Zhang Yong, a co-founder of Xinyuan China, alongside others such as Feng Lun and Ma Weihua, to manage real estate assets.
- Vantone Real Estate
- Vantone Real Estate, now known as Vantone Development, was founded in the 1990s by the "Vantone Six Gentlemen" including Feng Lun, who later became the sole leader as other founders exited. In 2014, Feng Lun stepped down as the actual controller, after which the company ceased significant land acquisitions and saw its business scale lag in the real estate industry.
- Yangpu Naijite Industrial Co., Ltd.
- Yangpu Naijite Industrial Co., Ltd. is used by Feng Lun as a holding platform for operating real estate investments and related businesses after his departure from Wantong Real Estate.
- Hainan Yedao
- Hainan Yedao (600238.SH) is a company previously involved in capital operations with the "Oriental Group," overseen by Feng Biao. However, internal conflicts erupted within the company, leading to challenges. Feng Biao, a significant player in A-share investments, had engaged in managing the firm but eventually faced difficulties, resulting in his exit.
- Jiaying Pharmaceutical
- The article mentions Jiaying Pharmaceutical (002198.SZ) regarding its past financial operations. Jiaying Pharmaceutical experienced internal conflicts and faced issues related to "Oriental Group," controlled by Feng Biao, leading to disputes and challenges with its shares being auctioned due to debt problems.
- Oriental Yinyuan
- Oriental Yinyuan, controlled by Feng Guo and ultimately by his father Feng Biao, is aligned with Jinling Holdings and its actual controller, Huang Hongyun. Oriental Yinyuan planned to purchase additional shares of Jinke Properties to safeguard its stock price as part of Jinke's restructuring efforts. Despite its intention, the company has only increased its holdings by 41,820 shares at roughly 500,000 yuan, demonstrating minimal engagement so far.
- R&F Properties
- R&F Properties previously underwent debt extensions due to financial difficulties but continued struggling to repay debts. The likelihood of a judicial restructuring is high, as extensions were insufficient to address issues, potentially requiring subsequent and multiple extensions.
- China Fortune Land Development
- China Fortune Land Development (CFLD) has previously pursued a debt restructuring strategy through agreement reorganization, also known as an agreement reorganization. However, it is anticipated that they may undergo judicial restructuring by 2025, as legal concentrated jurisdiction is set to expire, triggering potential litigation. This raises expectations of formal restructuring, especially with the Supreme Court's decision not to extend the jurisdiction term.
- Country Garden
- Country Garden is mentioned as a company with significant debt but still some value, making it a candidate for restructuring to attract potential new funds and resume normal business operations. It is contrasted with Evergrande, which is seen as having no restructuring value, suggesting it may be directly liquidated.
- Evergrande
- The article briefly mentions Evergrande as an example of a company without restructuring value, suggesting it should directly undergo liquidation. This implies that Evergrande's financial situation is dire, and unlike companies with potential for recovery through restructuring, its debts and business circumstances may not allow for a viable turnaround strategy.
- First half of 2022：
- Jinke Property incurred debt defaults and its stock price plummeted.
- By February 14, 2023：
- Jinke planned a restructuring to preserve its shell status after failing to find local state-owned assets for a bailout.
- April 2024：
- Jinke and its core subsidiary Chongqing Jinke are set to formally enter the reorganization process.
- September 2024：
- As of the end of September 2024, Jinke Property's liabilities exceeded its assets.
- October 8, 2024：
- Jinke announced it received notice of an agreement to act in concert with Dongfang Yinyuan.
- November 23, 2024：
- Feng Biao stated his active alignment with Jinke's actual controller as a concerted actor.
- Late November 2024：
- Shanghai Pinqi consortium was ultimately chosen for Jinke's restructuring.
- December 14, 2024：
- Jinke Property Group announced progress on its restructuring, stating it had signed a restructuring investment agreement with a consortium.
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