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With The Debt Explosion, The Truth Of Shandong'S Leveraged Buy-Out Expansion

2020/3/16 12:08:00 0

Ruyi

Over the past few years, Qilu land unexpectedly rose to Shandong, a fashion brand holding company. However, with the debt explosion, the truth of Shandong's leveraged buy-out expansion is gradually emerging.

Shandong Ruyi, the parent company of 002193.SZ, launched a takeover of Swiss luxury brand Bally in 2018. But according to foreign media reports, the transaction has not yet been completed due to the fact that Shandong's $600 million acquisition has not yet arrived for two years.

In addition, Shandong Ruyi spent $16 million 500 thousand in 2017 to acquire Bagir, an Israeli menswear group, but only paid 6 million 500 thousand. Shandong Ruyi also defaulted on its acquisition of Japanese clothing brand RENOWN (about 5 billion 300 million yen).

In the second half of last year, the liquidity problem of Shandong Ruyi and its controller Qiu Yafu was highlighted. The 23.12% stake of Ruyi group, which was directly held by Shandong Ruyi group, was completely frozen. Shandong Ruyi has been included in the list of Executors for more than 400 million of its debts. A number of international and domestic rating agencies dropped Shandong's Ruyi credit rating. (see: "Qiu Yafu's sequelae of M & A: highlight of Shandong's Ruyi debt")

According to the financial report, as at the end of 6 in 2019, Shandong's voluntary interest bearing debt was 31 billion 775 million yuan, of which the short-term interest bearing debt was 14 billion 984 million yuan, accounting for 47.16% of the total interest bearing debt, and its cash on hand was only about 9 billion yuan.

However, Ruyi soon introduced the state owned rescue field in Jining. In October 18th of last year, Ruyi's controlling shareholder, Ruyi fashion, transferred 26% stake to the Jining capital of Shandong under the background of 3 billion 500 million yuan, which became the second largest shareholder of Ruyi in Shandong. Qiu YV holdings's 53.49% stake in Ruyi fashion is still Shandong Ruyi controlling shareholder. While putting Jining into the stock market, it also provides irrevocable joint and several liability guarantee for the "15 voluntary debt".

But at present, the funding problem of Ruyi has not been alleviated.

   Ruyi expansion sequelae

Ruyi, formerly known as Shandong Ruyi wool textile group, was established in 1972. After 2002, it was led by general manager Qiu yfu, through equity merger and acquisition. After a series of equity changes, Qiu yfu became the real controller of Shandong Ruyi at the end of 2009.

Shandong Ruyi is mainly engaged in textile and garment manufacturing in upstream apparel industry; cotton, chemical fiber textile and printing and dyeing finishing business. After fully controlling Shandong's Ruyi, Qiu Yafu quickly began to expand to M & A in the world, and its industrial chain opened up to the well-known clothing brands in the lower reaches.

From 2010 to early 2019, Qiu yavu controls Shandong's willingness to spend more than 4 billion dollars on frequent overseas acquisitions. It has included the Japanese clothing giant RENOWN, the French light luxury clothing group SMCP, the Swiss luxury brand Bally, the men's wear listed company, Trinity, and so on. It has become a remarkable Chinese fashion group. Shandong Ruyi also won the "China's LVMH". Name.

At present, Qiu Yafu's Ruyi Department has 4 listed companies in the world, namely, A share company, Ruyi group, Hong Kong listed companies, 0891.HK, Japan's Renown and France fashion group SMCP.

With the expansion of M & A, Shandong Ruyi has realized the synergy of upstream and downstream industrial chains. However, in terms of industrial integration, Shandong's Ruyi acquisition company has not made effective breakthroughs in the Chinese market. In addition, the brand of Shandong Ruyi's acquisition is poor. For example, the net profit of Rena and SMCP in 2018 was -2.36 billion yuan and 392 million yuan respectively, and the loss of Li Bang holdings for many years, which made it face greater financial pressure in the short term.

It is worth mentioning that the global apparel industry is entering the cold winter period. Many brands either fall into huge losses or go bankrupt directly. In the domestic listed companies, La Natsu Bell (603157.SH), known as the "Chinese version of ZARA", lost 1 billion 600 million to 2 billion 100 million in 2019. 002269.SZ is expected to make a net loss of 500 million to 1 billion yuan in 2019, while the sports clothing brand 603555.SH (603555.SH) is expected to lose 765 million yuan to 915 million yuan in 2019.

Ruyi group's performance is also more general. Ruyi group performance express shows that its revenue in 2019 was 1 billion 150 million yuan, down 13.4% compared to the same period last year, and net profit was 50 million 30 thousand, down 49% compared to the same period last year.

In order to get rid of the debt crisis, Qiu Yau is eager to promote asset securitization and finance from the stock market.

In August last year, Shandong Ruyi has disclosed that in order to solve the demand for debt repayment funds, 5 billion 800 million industrial real estate assets securitization will be completed within the year, and 17 billion Leica projects will be launched, and the total assets of listed companies will be 25 billion 600 million and asset securitization will be realized. In addition, Shandong's Ruyi also says it will convert its nearly 100 billion non staple assets, including real estate and energy projects.

It is noteworthy that Qiu Yau is planning capital operation to load a large number of equity assets into the listed company Ruyi group. Ruyi group announced in July last year that it will issue 60% stake to Ruyi fashion, China XinDa and Shandong Jing DA in the way of issuing shares, and purchase 74.36% stake of Shandong Ruby Technology (Hongkong) from Shandong Jing da.

The remaining 40% stake of Ruyi brand in Jining is held by Guang Da Xing long, which is similar to XinDa in China and is also a real debt in Ming stock market. In addition, Jining Ruyi brand still has 887 million loans and interest payable. 40% stake in Ruyi's brand will be repurchased by Qiu Yafu's Ruyi fashion, and the listed company will sign another agreement to control the 100% stake of Jining Ruyi brand.

Jining Ruyi brand mainly holds 51.3% stake in Hong Kong listed companies's Li Bang holding company. Ruyi Technology (Hongkong) owns 100% stake in the company. Li Bang holdings is a high-end men's clothing retailer, mainly engaged in retail business of light and luxurious men's clothing in China and Europe. In the first half of 2019, Li Bang achieved a profit of 938 million and a net profit of 67 million 370 thousand.

Source: Tai Mo finance and economics author: starfish

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