Yida China USD651 Million Loan Payment at Risk After Cops Nab Exec Director, Firm Says
Xu Wei
DATE:  Feb 25 2020
/ SOURCE:  yicai
Yida China USD651 Million Loan Payment at Risk After Cops Nab Exec Director, Firm Says Yida China USD651 Million Loan Payment at Risk After Cops Nab Exec Director, Firm Says

(Yicai Global) Feb. 24 -- Yida China Holdings' repayment of CNY4.58 billion (USD651 million) on loans is in doubt following the apprehension of its Executive Director Chen Donghui, the Shanghai-based park development and operation, engineering construction and property management firm announced today.

If the lender asks the company to repay the loan immediately this will put even more of a squeeze on its cash flow, it said in its statement.

Chen's detention on suspicion of embezzlement has technically caused Yida China Holdings' total outstanding principal of over CNY4.5 billion to trip several fail-safe switches under the regulatory scheme. The lenders may thus call in Their loans and demand immediate repayment, Yida China Holdings said.

Police detained Chen recently on suspicion of embezzlement. The company, which has been unable to contact him, had no further information on his status as of yesterday, it said.

Yida has requested forbearance from lenders, which the statement did not identify, in the face of the triggering event, but no decision has yet been forthcoming on this plea. The detention itself will neither affect the loan maturity dates nor add to the total of short-term loans, per the statement.

Their Call

Lenders will decide whether to call in the loans and seek repayment mainly based on their judgment as to the company's operations. Its financial status is currently stable and it therefore sees little chance immediate repayment is a looming threat, it said.

The firm has suffered a cash-flow crunch because of the Covid-19 epidemic and will defer the repayment of some amounts owed to China Minsheng Investment Group until the end of June due to the impact of the epidemic. The amount of that loan is CNY22 million (USD3.1 million), Yida Holdings announced on Feb. 18.

Some of the company's on-site sales offices have been shuttered since the Chinese New Year. Most of its staff are at home and have not yet resumed work, it said.

International credit rating agency Fitch Ratings pegged the company at high-risk level in terms of capital market debt refinancing risk in a report it released on Feb. 19.

The firm announced it was suffering from liquidity issues in June, Yicai Global reported at the time, and its shares [HK:3639] have suspended trading since Jan. 2.

Editor: Ben Armour

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Keywords:   Yida China Holdings