the former richest man in northeast china can't pay back the money, and 4 banks are anxious
2024-09-26
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zhang hongwei, chairman of the board of directors of dongfang groupimage source: visual china
on the one hand, he lacks money to pay off his debts, and on the other hand, he is still "bleeding". zhang hongwei, once the richest man in northeast china, is in a very bad situation now.“if you borrow 100,000 yuan, you’re afraid of the bank; if you borrow 10 million yuan, both you and the bank are a little panicked;if you borrow 1 billion, the bank will be afraid of you.”the richest man ma who said this has faded from public view, but the situation in his words is stillthis is happening to another northeastern tycoon, zhang hongwei.as zhang hongwei's "oriental group" fell into a liquidity crisis, some banks were afraid that he would not be able to repay the money, so they took the lead in suing the oriental group and demanded early repayment of the loan.some creditors even applied to the court for reorganization of dongfang group two months ago due to serious concerns about its debt repayment ability.oriental group has entered the pre-reorganization stage and is publicly recruiting restructuring investors.however, in this situation of extreme lack of money, the oriental groupthe real estate sector is still in a state of "bleeding", which undoubtedly made the situation worse.just recently, beijing qinglonghu shengtong real estate development co., ltd., the project company of the "emerald west lake" cooperative development project of dongfang group in beijing qinglonghu section, was approved by beijing fengtai court.listed as the person to be executed, the total execution amount is nearly 6.93 million yuan.correspondingly,oriental group's real estate business operator - oriental anyi (beijing) urban development investment co., ltd. (hereinafter referred to as "oriental anyi")the company has been incurring losses for more than ten years.the accumulated losses once exceeded 7.3 billion yuan.on the one hand, he lacks money to pay off his debts, and on the other hand, he is still "bleeding". zhang hongwei, once the richest man in northeast china, is in a very bad situation now.“if the reorganization fails, the company will be subject to bankruptcy liquidation and the risk of being declared bankrupt.according to the relevant provisions of the shanghai stock exchange listing rules, the company's shares may face the risk of being delisted. "oriental group warned of the risks faced by the company in its 2024 semi-annual report.which banks are “trembling”?in june this year, dongfang group issued several announcements in succession.from "restricted deposits" to "regulatory inquiries", from "delisting risks" to "initiatives of investigation", each and every one of them concerns the "rise and fall, honor and disgrace" of the company, and it also makes the boss zhang hongwei overwhelmed.dongfang group is very important to zhang hongwei. he and three other listed companies in which he holds controlling stakes are:united energy, jinzhou port, minsheng bank, together they built his "oriental group". with this "business empire",zhang hongwei was once extremely powerful, with a net worth of hundreds of billions of yuan, and became a "regular" on various rich lists.now that the crisis of the "eastern group" is becoming increasingly apparent, this northeast tycoon, who is in his seventies, is heading towards the center of the vortex with his business empire.the banks that owe money to it are very anxious., some banks have taken legal action to demand loans in advance.recently,china merchants bank harbin branch sued oriental group, demanding that it repay the loan principal of approximately 1.092 billion yuan in advance.if it cannot repay the money, the bank asks the court to order that it has priority right to receive payment from the auction or sale of oriental group’s corresponding shares in china minsheng bank (used as collateral).after the crisis was exposed, it was not just china merchants bank that was anxious for money.shanghai pudong development bank, industrial bank, agricultural bank of chinathe branches in the northeast region also became anxious and took action, even filing lawsuits, to demand money from the oriental group.for example, by the end of june 2024,dongfang group owes 200 million yuan to shanghai pudong development bank harbin branchon july 5, the bank announced that the loan was due early and filed a lawsuit;eastthe group owed industrial bank harbin garden branch 469 million yuanon july 24, the bank announced that the loan was due early and required repayment;dongfang group's subsidiary dongfang grain and oil owes pudong development bank 150 million yuan, the bank declared the loan matured early and filed a lawsuit;dongfang grain and oil owes 300 million yuan to the fangzheng county branch of the agricultural bank of chinaof the total, 100 million yuan was due in july and 200 million yuan was due in august. since both loans were not repaid on time, the fangzheng county branch of the agricultural bank of china also filed a lawsuit to claim the repayment.in fact, there are far more banks that are owed money than this.according to the 2024 semi-annual report, banks from which dongfang group and its subsidiaries borrowedat least 15 more, including industrial and commercial bank of china, china construction bank, bank of china, export-import bank of china, ping an bank, china citic bank, bank of beijing, hua xia bank, xiamen bank, dbs bank (china), shengjing bank, harbin rural commercial bank, longjiang bank, heilongjiang wuchang rural commercial bank and minsheng bank,the loan amounts range from tens of millions to billions of yuan.2.3 billion yuan overdue to minsheng bank
as the most valuable equity asset of oriental group, most of the loans applied by oriental group and its subsidiaries from major financial institutions arethe shares of china minsheng bank held by it were used as collateral.as of the end of june 2024, dongfang group held approximately 1.28 billion shares of minsheng bank (2.92% of the shares), of which approximately1.273 billion shares are pledged, accounting for as high as 99.5%.even minsheng bank itself stated in its 2024 semi-annual report that “as far as the bank is aware, 17.0287 million shares of the bank held by oriental group involvejudicial freeze1.163 billion shares involved in the judicial mark situation. "however, for minsheng bank, the pledge and freezing of equity is not the most serious problem. a more cruel fact is that among the banks that are owed money,minsheng bank is the one that is owed the most.dongfang group is the main shareholder of minsheng bank. in 2000, when minsheng bank was planning to go public, zhang hongwei seized the opportunity to lead the "dongfang group" to enter the market strongly, and once became the second largest shareholder. during this period, zhang hongwei's "dongfang group", lu zhiqiang's "fanhai group" and liu yonghao's "new hope group" were called the three major capital forces among minsheng bank shareholders.zhang hongwei, lu zhiqiang and liu yonghao also serve as vice-chairman and non-executive directors of china minsheng bank.to this day, zhang hongwei's investment in minsheng bank is still talked about in the business world.minsheng bank never imagined that the people who would cheat it so badly many years later would be its two major shareholders.it is known from the 2024 semi-annual report of minsheng bank that dongfang group and its affiliated companies havethe loan balance still reached 7.404 billion yuan; among them, the loan balance of oriental group and its subsidiaries in minsheng bank was 5.152 billion yuan, and 2.335 billion yuan was overdue.in order to collect debts, china minsheng bank has fallen out with one of its major shareholders, the "fanhai group". the two sides have been in court for a long time and are still in a stalemate.now faced with over 2.3 billion yuan in overdue loans from another major shareholder, oriental group, i wonder what minsheng bank will do?as of the end of june 2024, the cumulative principal of overdue loans of oriental group and its subsidiaries was rmb 2.735 billion, and the cumulative debt principal required to be repaid in advance by creditors was rmb 1.126 billion.in other words, the oriental group must repaythe total debt exceeds 3.8 billion yuan.however, the company's accounts during the same periodthe company has only rmb 1.756 billion in cash and rmb 6.277 billion in short-term loans that will mature within one year.this shows that oriental group has a huge short-term funding gap.
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the real estate sector is still "bleeding"
zhang hongwei is one of the earliest private entrepreneurs to start a business after the reform and opening up.in 1992, the oriental group, which he actually controlled, was established. it became the first listed private enterprise in heilongjiang province and one of the earliest private enterprises in china to implement shareholding reform.in january 1994, oriental group was listed on the shanghai stock exchange. its stock price rose by more than 80% in just two months, and zhang hongwei's net worth also rose accordingly.this year, forbes published its first ranking of china’s richest people. the first place went to liu yonghao and liu yongxing, brothers of hope group. zhang hongwei followed closely behind and became the richest man at the time.the richest man in northeast china。after years of development, zhang hongwei's oriental group's business now covers four major industrial sectors: modern agriculture and healthy food, finance, port transportation, and real estate development.at its peak, the company's total assets were close to 50 billion yuan。now, as the eastern bloc crisis emerges,on the one hand, the company lacks money to repay debts and is sued one after another by banks and other debtors, and is even facing the risk of bankruptcy due to the application for pre-reorganization; on the other hand, the company's real estate sector is still continuing to "bleed", making the company's situation worse.as of the end of june 2024, oriental group's total assets were 36.242 billion yuan, a year-on-year decrease of 4.66%; operating income in the first half of the year was 481 million yuan, a year-on-year decrease of 85.54%; net profit attributable to the parent company's owners was 92 million yuan, turning losses into profits compared with the same period last year.in,oriental anyi, the operating entity of the real estate business, achieved operating income of only 25.7327 million yuan in the first half of the year, a year-on-year decrease of 15.67%; the net profit attributable to the parent company's shareholders was -185 million yuan.after the equity penetration, dongfang anyi is 100% owned by dongfang group. however, when it was first established in 2013, the company was originally named guokai dongfang urban development investment co., ltd. (hereinafter referred to as "guokai dongfang"). at that time, among the shareholders, in addition to beijing sunfire cultural industry investment co., ltd., of which zhang hongwei was the legal representative,there is also the presence of the "national development and reform commission"——kaiyuan (beijing) urban development fund management co., ltd., a subsidiary of china development bank that holds 100% of its shares, is also one of the shareholders.however, after several rounds of operation,today, cdb oriental has become a wholly-owned subsidiary of oriental group and has been renamed oriental anyi.according to oriental group, the company's real estate business is mainly concentrated in the qinglong lake area on the southwest sixth ring road of beijing, including first-level land development projects waiting to be listed, as well as second-level development projects such as commercial offices and hotels.specifically, oriental group’s primary land development projects include block b and block c in the core area of qinglong lake international cultural city in fengtai district, beijing, as well as the qinglong lake area renovation project in wangzuo town, fengtai district.however, the plot on the north side of the core area c has been listed three times since 2021, but has not been sold. at the same time, in the face of the continued downturn in the real estate market, or in order to stop losses in time, dongfang group has applied to withdraw from the qinglong lake area renovation project in wangzuo town, and has obtained the consent of the fengtai district government.however, as of the end of june 2024,oriental group has invested a total of more than 6.5 billion yuan in the above-mentioned land primary development projects, but the amount of carried-over income is less than 3.2 billion yuan.oriental group's secondary development projects mainly focus on block a in the core area of qinglong lake international cultural city in fengtai district, which includes blocks a01, a02, a03 and a04, involving multiple project types such as self-occupied commercial housing, hotels, apartments, clubs, etc.as of the end of june 2024, oriental group is the abovethe secondary development projects invested rmb 8.254 billion, but the carry-over income received was only rmb 4.428 billion.the performance of the two major projects, feicui west lake and xihu yuezhu, developed in cooperation with vanke, longfor and others, is also not satisfactory.oriental group holds 55% and 40% equity interests in these two cooperation projects respectively. as of the end of june 2024, the total investment in the two major projects is approximately rmb 20.217 billion, but the total contract amount is rmb 14.52 billion.not only that,beijing qinglong lake shengtong real estate development co., ltd., the project company of feicui west lake, also became the "person subject to execution", with the total execution amount being nearly 6.93 million yuan.as of the end of 2023, the balance of the cooperative development funds owed by oriental group to beijing qinglonghu shengtong real estate development co., ltd. was rmb 1.486 billion.a provision for bad debts of rmb 352 million has been made.“given the cooperation with thethere is great uncertainty about the amount that can be recovered in the futurewe are unable to obtain sufficient and appropriate audit evidence to determine whether it is necessary to make adjustments to these amounts," said dahua accounting firm, the auditing agency of oriental group.on-duty editor: fan yongfengeditors: ma lin, wen hongmei
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