2014-03-17

Chaori Bond Default Hits Trusts

There were many reports saying the default of Chaori would not cause a domino effect, but it there is at least limited contagion because some trusts are invested in the bonds. According to the article, trust industry veterans do not believe the default will trigger a default on trust products. That said, a restructuring is required and since Chaori is the first onshore default, there are regulatory and legal issues that are as of yet unanswered. Long story short: little to no contagion, not enough to cause a trust to default by itself, but a messy situation that could drag on for some time.

超日背后信托:厦门信托继续深陷 中融金蝉脱壳

Google Translate version. Where it says super or super day, it is the bad translation of Chaori.
In dire straits * ST super day , the number of trust companies pulled into the game dead end. Up to now, the financial trusts, Industrial Trust, Suzhou Trust had to get out, and the rest Trust "super-day project" is still deep or shallow subsidence in the mire.

Many trusts interviewed industry veteran, told reporters that the financial weekly, involved in the reorganization, and then through block trades or holdings of these trusts to be the last line of defense projects.

Many investors quilt single project

According to financial weekly newspaper reporter to statistics, from 2011 to 2012, over 17 times a day the sun has issued notice to shareholders equity pledge, share pledge announcement released seven times, twice to lift the share pledge and also announced a pledge announcement, its protagonists are yes yes Nikai Lu, Ni Na daughter. According to * ST super day hanging out in the Shenzhen Stock Exchange announcement statistics, there are still 233 million shares pledged in the Trust.

The evening of March 4, * ST is not a super-day interest payment notice, causing raised bond defaults first. The news quickly spread in the circle of trust, trust products related to the redemption of principal and interest can be in focus.

According to statistics, in 2011, a total of seven trusts had established a trust for its products, which are Guoyuan Trust, Union Trust (later renamed Industrial Trust), the financial trusts, Xiamen International Trust, Minmetals Trust, Shandong International Trust Suzhou Trust. According to the financial weekly (micro-channel public No.: money-week) reporter learned that the financial trust, Industrial Trust, Suzhou Trust had to get out, and the rest are still stuck in the quagmire of trust.

November 18, 2010, Ultra-day sun on the Shenzhen Stock Exchange listing, the starting price of 36 yuan, the starting number of 6600 million shares, raising funds 2.376 billion yuan. Chairman Nikai Lu and his daughter Ni Na aggregate shareholding of listed companies amounted to 43.89%, with starting prices, Ni Shi Funv market value of the shares held by ultra-Day 9.072 billion yuan.

Between the two years, the ultra-day moratorium has worked Ni Shi Funv will hold a total of 298 million shares of outstanding shares, pledged to the trust for a loan.

Specifically, Shandong International Trust and 110 million shares in the financial trust 6137.98 million shares, shares of Minmetals International Trust 4869, Xiamen International Trust 3300 shares, 2500 shares Suzhou Trust, Union Trust (2011 registered Chinese name change for "Industrial International Trust Co., Ltd.") 937.5 million shares, 600 million shares of Societe Generale International Trust, Anhui Guoyuan Trust 180 million shares.

According to financial weekly newspaper reporter to statistics, from 2011 to 2012, over 17 times a day the sun has issued notice to shareholders equity pledge, share pledge announcement released seven times, twice to lift the share pledge and also announced a pledge announcement, its protagonists are all Nikai Lu Ni Na daughter. According to * ST super day hanging out in the Shenzhen Stock Exchange announcement statistics, there are still 233 million shares pledged in the Trust.

These into a super-day storm Trust projects, almost all as a single trust scheme, public information can be found rarely. Many trust industry veteran, said: "Investors are mostly single trust scheme for banks, enterprises, should have been locked, but the trust will certainly be the aftermath."

Xiamen unexpired trust products

Many industry insiders speculated that the Trust may be a financial Loaning or packaged for sale along with other assets to asset management companies. "Even super stock price continued to fall, packaged together as long as the assets have stable cash flow, coupled with ultra-Day other equity debt, asset management companies are still willing to take the disk." Trust in the financial industry told a financial weekly newspaper reporter.

As for payment methods, someone's trust each different treatment progress.

The most common approach is the additional stock or cash as collateral. However, when the year ended November 14, 2012, the company pledged last announcement, Nikai Lu name has not only pledged 16.1 million shares, while the shares of 6.51% Ni Na name have all been pledged. They were caught described as "no shares may charge" position.

Even the few completely pledged shares, trust companies also had to face the embarrassment of stock price severely diminished.

When listed in November 2010, Ultra-day sun as much as 40 yuan per share price, after the stock reversed, * ST super-day suspension before the last trading price is only 2.59 yuan / share, shrinking by as much as 93.5%.

Other means of risk control, the industry introduced to the financial weekly newspaper reporter, in general, a trust company under the terms of the project risk rating set. "For financiers operating status rating, if higher ratings, risk control requires only a tool, if rating is low, we must pledge, hypothecate, joint liability guarantees and other measures." Trust in central China, a senior manager for financial weekly newspaper reporter, said: the "super-day situation, they need to mention personal chairman joint liability guarantees to attract institutional investors."

Limited to a single trust concealment, unwilling to trust each disclose relevant information. Current can be informed that the financial trust, sources said, "was all the advance payment of principal and interest between 2012 to 2013." In 2011, the Trust has released six financial Ultra-day sun series of projects with a total size of about 300 million yuan. It was revealed Trust with interest, six projects was approximately 40% equity pledge that pledged price 20-21 yuan per share. This series was originally to expire in October this year in May.

Many industry insiders speculated that the Trust may be a financial Loaning or packaged for sale along with other assets to asset management companies. "Even super stock price continued to fall, packaged together as long as the assets have stable cash flow, coupled with ultra-Day other equity debt, asset management companies are still willing to take the disk." Trust in the financial industry told a financial weekly newspaper reporter.

Suzhou Trust relevant person in charge of the financial weekly newspaper reporter said: "The original plan product term of 5 years, but because the date fell over, and see the prospects for the company, in 2013 the end of the product has been completely liquidated."

With these two firms, more brains trust or extend the product life.

Xiamen International Trust and stakeholders on the financial weekly newspaper reporter, said, "We are here in a single project, a single institutional clients are fully aware of the current overall super-day operating conditions, this project has not expired, small scale we now do is actively cooperate with the client, there are some relevant procedures in the process of ultra-day operations and the overall solvency be concerned about. "

November 30, 2011, 12.90% of total share capital Nikai Lu super day pledged to the Export-Import Bank of China and Xiamen International Trust, and the only time it clear that financing for the Ultra-day sun. "Ultra-date with the thought that Shanghai Solar Energy Technology Co., Ltd. to apply for bank loan guarantees." In more than a dozen other equity pledge financing announcement, financing purposes are described as "used to apply for bank loans," or "is used to apply for loans," said nothing about finance and listed companies.

Sun Investor Relations super day for those financial weekly (micro-channel public No.: money-week) told reporters, "There have not received any notice of disposition sent to the trust, the stock is the total Ni personal, trust company looking to contact him directly In addition, the stock pledge did not notice, it means there is no lift. unless pledge ratio is too low. "

Involved in the reorganization holdings, trust last line of defense

Many trust industry official said, "Even if only a shell, but also great value through restructuring, not without the possibility of asset injection, trying to make him come back Quote, then the bulk of the reduction of exit."

Ultra-day sun as it involves trust products are mostly single trust scheme, this round payment process is quite mysterious. Many veterans interviewed expressed trust industry, * ST ultra-rigid payment date will not break the unspoken rules of the trust industry.

However, the restructuring seems to be the only final way to turn things around. Nikai Lu told the media responded that the Trust is currently financing 800 million yuan, of which about 200 million yuan * ST super day for liquidity, the other 600 million for their personal projects. At the same time, * ST super-day debt, outstanding bank loans of $ 2.7 billion over 11 days of default debt 1,000,000,000. And lawsuits, debt dispute has reached 2.2 billion. In addition, due to the huge loss of nearly 3 billion for three consecutive years, * ST super day was listed on the Shenzhen Stock Exchange suspended the likelihood is great.

"Even post-insolvency, must withdraw from the market or reorganization, or a trust company stock in hand. Present situation, this money should dig afford." Of a trust company in South expressed a middle class financial weekly newspaper reporter.

In addition a number of the trust industry official said, "Even if only a shell, but also great value through restructuring, not without the possibility of asset injection, trying to make him come back Quote, then the bulk of the reduction of exit."

This, insiders also expressed concern; "trust involved in the reorganization requires approval of the CBRC, the industry has no such precedent, such a bad precedent for opening control measures such as the wind will ever lose significance, disguised mergers and acquisitions. "

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