24/4/2018-6

Central Central Buyers’ Loan Transformation Loan Program Less 1 Billion Abandoned Mezzanine Loans or Reflects Difficulties in Financing

Chang Shih (1113) sold 75% of the center’s ownership rights at a price of 40.2 billion yuan last year. The relevant buyer’s consortium is seeking information on financing. According to Bloomberg’s report, the Central China Buyers’ Consortium’s loan program will change again. The new version will abandon the mezzanine loan portion, and will be used to borrow a total of 32 billion yuan from the bank for a one-year loan period and a one-month extension of the US dollar loan. Some market participants believe that the amount of loans for the new scheme will not only be reduced by nearly RMB 1 billion, but also due to changes in the loan structure, or reflected in the fluctuation of the market conditions. The buyer is not easy to raise loans.

Ming Pao reporter Chen Weixi

Nearly six months after the transaction was announced, the consortium structure of the buyers of the Central Center has changed significantly. Except for the original local buyers such as Mayam and Zhang Shunyi, Jin Lifeng (1031) chief executive Zhu Liyuehua and Shimao Real Estate (0813) Chairman Xu Rongmao replaced State Reserve Energy became an investor. Changes in the buyer’s loan program have also been reported many times. Not only has the amount of loans continued to shrink, but also the structure has been adjusted (see table).

The program has been repeatedly transferred

In the new financing plan, the buyer’s loan is divided into two-year dollar loans with a one-year period and six months’ worth of equivalents of RMB 26 billion and RMB 6 billion, of which RMB 26 billion is the loan with the first priority lien, and the remaining RMB 6 billion is the second highest. The lien loan is different from the plan announced at the beginning of the month. The loan amount is less than RMB 920 million and the mezzanine loan portion is aborted.

The gap with the trading mantissa is 4.18 billion

The new loan financing program resulted in a total of RMB 32 billion. Compared with the buyer’s consortium, it paid a total of RMB 36.18 billion to acquire the Central China Center. The gap is still RMB 4.18 billion, which is RMB 920 million less than the original plan, which seems to reflect “the less the borrowing is,” . A person in the corporate finance industry who knows about borrowing and financing said that in general, large-scale properties are acquired, and the lenders all require that the company and even the acquirer provide the company’s equity as collateral. At present, the financing plan of the Central Center has changed several times in a short period of time, and there has been a situation where the total amount of borrowings is less than the original plan. It is not easy to reflect the current market conditions and seek financing at a huge level, and it is even more difficult to finance.

Dividing two loans to improve feasibility

The corporate finance community also believes that this time the buyer consortium seeks financing from banks. The bank splits the relevant loans into first-order lien loans of RMB 26 billion and second-ranking lien loans of RMB 6 billion, reflecting the current supervision of the banking industry. Under the regulations, it is not easy to make a lump sum financing loan. Instead, two parts need to be separated to improve the feasibility of financing rather than saving interest.

It is also known that mezzanine loans are a form of borrowing between senior debt and equity financing. They are higher-risk loans, and provide more non-traditional loans, but are investment banks, private investors or private equity funds that seek more returns. Therefore, interest rates are generally high. Disposing of mezzanine loans this time can be regarded as a buyer’s desire to reduce high interest loans. However, some insiders believe that new financing options may save a lot of interest costs. Therefore, it cannot be ruled out that there are fluctuations in market conditions. It is even more difficult for investors who are willing to provide funds.