Trapped in tens of billions of debts, Dandong Port fights to the death

The market entity type of Dandong Port Group is "limited liability company (foreign joint venture)", and the four shareholders of the group are all enterprises registered in Hong Kong. According to China Business News, the investors of these four companies are Wang Wenliang, chairman of Dandong Port Group. (Oriental IC/Photo)

On March 22, 2019, senior executives of Dandong Port Group Co., Ltd. (hereinafter referred to as Dandong Port Group), which was in a debt crisis of tens of billions, appeared in Beijing and held a "Dandong Port Group" Hong Kong Debt Restructuring Media Meeting”. At this time, the high-profile proposal to carry out debt restructuring was a desperate attempt by Dandong Port Group to resist bankruptcy reorganization.

In early 2005, Dandong Port Group was restructured from the former Dandong Port Authority. According to the China Executive Information Disclosure Network, the actual controller of Dandong Port Group is Wang Wenliang. Dandong Port is mainly engaged in port warehousing, loading and unloading and transportation business.

Since October 2017, Dandong Port Group has begun to default on its debts due to its continuous expansion of accumulated debt. According to wind data, so far, 7 of the 28 bonds issued by Dandong Port have defaulted, with a total scale of 7.95 billion yuan.

It’s been nearly a year and a half since the first debt default. According to 21st Century Business Herald, according to a resolution voted by the Creditors Committee of Dandong Port Group, which was formed by banks and other financial institutions, some members of the Creditors Committee have recently submitted an application to the court for bankruptcy reorganization of Dandong Port Group, waiting for the court to decide whether accepted.

Hu Fenghao, CEO of Dandong Port Group, admitted at a media conference that the court has not yet formally accepted the case, "but it has issued a notice asking us to prepare materials for bankruptcy and reorganization."

Hu Fenghao also said that the reason why Dandong Port refused to go bankrupt was that debt restructuring was sufficient to solve the group’s debt problem, and all that was needed was the next 3-5 years.

Is there still time for Dandong Port?

Why did the debt crisis occur? Hu Fenghao gave two reasons.

First, due to the spillover effects of events such as the bankruptcy of Northeast Special Steel, Dandong Port’s bond issuance plan, which was originally approved by the China Securities Regulatory Commission, was suspended. As a result, Dandong Port was unable to pay back the old with new and the capital chain was broken; second, , Public infrastructure such as channels and breakwaters in the Dadong Port area of ??Dandong Port, which should have been funded by the local government, as well as reclamation projects within the planned scope, were advanced by Dandong Port with 22.789 billion yuan.

Subsequently, Hu Fenghao came up with data as of February 2019, saying that the group’s total liabilities were 48.931 billion yuan, of which 39.65 billion yuan were interest-bearing debts from financial institutions and 9.281 billion yuan were operating debts; the group company’s books The total assets are 60.275 billion yuan, and the total value after inventory and evaluation is 89.469 billion yuan. Calculated in this way, its asset-liability ratio is 54.69%. If the government advance payment is deducted, the debt ratio will be even lower.

However, information from the Shanghai Clearing Network shows that since the release of the third quarterly report for 2017 on October 30, 2017, Dandong Port has not disclosed financial information. According to its third quarter report of 2017, Dandong Port has total assets of 60.18 billion yuan, total liabilities of 46.46 billion yuan, and an asset-liability ratio of 77%.

A person close to the Liaoning Provincial Government has doubts about the financial data disclosed by Dandong Port. He pointed out to Southern Weekend reporters that the total assets data released by Dandong Port this time is 30 billion more than the data disclosed in the third quarter report of 2017, which is obviously conducive to resolving debts. But now that Dandong Port has failed to reach an agreement with its creditors, it is clear that its financial data does not hold up.

According to the 21st Century Business Herald, citing a person close to Dandong Port, in addition to tens of billions of financial debts, Dandong Port also has billions of contingent liabilities and owes hundreds of millions of yuan in taxes. payment. There is a certain degree of "moisture" in the assets announced by Dandong Port. For example, the land assets owned or constructed under its name may have illegal use of the sea and illegal land reclamation.

Hu Fenghao insisted that Dandong Port has the ability to pay off its debts independently. The data it presented showed that it had repaid some of its debt. In addition, production and operations at Dandong Port are also recovering. For example, the group's revenue in 2018 was more than 2 billion yuan, which basically covered the current interest, repaid some bank interest arrears and open market bonds, and repaid arrears of employee wages.

A Dandong Port employee confirmed the claim of back pay to Southern Weekend reporters. He revealed that there had been wage arrears at Dandong Port before, but now the situation has improved, with “a delay of one month at most.”

Another Dandong Port employee also told Southern Weekend reporters that the port has been operating normally in recent years, and the annual throughput is not much different from previous years. Even after the debt problem emerged, there were no reports of widespread layoffs.

However, considering the development prospects, the former employee resigned and started selling strawberries. He also revealed that Dandong Bank suffered serious losses because the group was unable to repay its loan to Dandong Bank.

Hu Fenghao said that Liaoning Port Group is making preparations to take over Dandong Port. The full name of Liaoning Port Group is Liaoning Port Group Co., Ltd. It was established to integrate port resources in the coastal areas of Liaoning Province.

At the end of 2017, Liaoning Northeast Asia Port and Shipping Development Co., Ltd. was established as a port integration platform in Liaoning Province. At the beginning of the following year, 100% of the equity of Dalian Port Group and Yingkou Port Group was transferred to the company free of charge, and the actual controller of the two ports was changed from the local State-owned Assets Supervision and Administration Commission to the Liaoning Provincial State-owned Assets Supervision and Administration Commission.

In November 2018, China Merchants invested in Liaoning Northeast Asia Port and Shipping Development Co., Ltd. through a capital increase and obtained 49.9% of the equity. Since then, Liaoning Northeast Asia Port and Shipping Development Co., Ltd. has been renamed Liaoning Port Group.

The port integration in the coastal areas of Liaoning Province is in full swing, which has become a thorn in the side of Dandong Port.

Hu Fenghao said at the press conference that in 2017, China Merchants Group sent a working group to Dandong Port to inspect, which coincided with the occurrence of a debt default. Dandong Port proposed to the China Merchants Group that it first invest a sum of money to save itself. “If you save it, you can do whatever you want, and the shares can be transferred for free.” But the other party didn't agree.

This made Hu Fenghao suspicious. The invitation was rejected because the other party was waiting for the company to go bankrupt and "picked up Dandong Port for nothing."

The above-mentioned meeting minutes also show that as of January 8, 2019, 14 of the 17 member units of the debt committee voted to adopt the form of a liquidation team to promote the bankruptcy reorganization of the Dandong Port Department work, and agreed to request the government to take the lead in establishing a liquidation team for the Dandong Port Group.

Dandong Port has won the support of many legal scholars and issued an "Expert Opinion on Bankruptcy Law-Related Issues Regarding Dandong Port Co., Ltd.". The opinion states that even if the company enters bankruptcy and reorganization procedures, it is not appropriate for the government and relevant departments to serve as administrators or join the liquidation team.

In this regard, the above-mentioned people close to Dandong Port believe that the top priority is that the Dandong Court should accept the case as soon as possible and verify the company's actual assets and debts. As for the recent actions of Dandong Port, it is more like a delaying strategy. "Once bankrupt and reorganized, the company will lose control, so it announces to the outside world that it has a certain ability to repay debts to delay the creditors' application to the court for bankruptcy and reorganization."

This media meeting At the meeting, Wang Wenliang, the actual controller of Dandong Port, did not show up. Hu Fenghao said that he was recuperating in Hainan due to physical reasons. Public information shows that Wang Wenliang is 65 years old. He worked in the Dandong Municipal Government in his early years and later went into business in the early 1990s.

In February 2005, Dandong Port was established, and Rilin Construction Group Co., Ltd. was the first shareholder. Wang Wenliang, who was the legal representative and shareholder of Rilin Construction Group at the time, also entered Dandong Port and became the chairman of Dandong Port.

According to Tianyancha, the current market entity type of Dandong Port Group is a "limited liability company (foreign joint venture)", and the four shareholders of the group are all companies registered in Hong Kong. According to China Business News, the investors of these four companies are all Wang Wenliang, chairman of Dandong Port Group, but the four companies have not actually carried out business activities and do not have any other operating assets. Wang Wenliang is the actual control of Dandong Port. People, and shell companies established to evade shareholder responsibilities.

Wang Wenliang was once known as the "richest man in Dandong" and ranked 1,480th on the 2018 Hurun Global Rich List with a wealth of 12 billion yuan. He spends generously. According to the Investment Times, Wang Wenliang once donated US$25 million to become a trustee of New York University, and later donated US$2 million to the Hillary Clinton Foundation.

In 2016, Wang Wenliang was involved in the election bribery case of National People's Congress representatives and was deprived of his qualifications as a National People's Congress representative. He has lost contact with him to this day.