Thu 06/10/2021 19:05 PM
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Management of Red Star Macalline Group Corporation, the listed subsidiary of Red Star Macalline Holding Group, said during an on-site investor event yesterday, June 9, that the company plans to lower its interest-bearing debt by RMB 10 billion ($1.565 billion) within the next three years, by lowering RMB 3 billion to RMB 5 billion interest-bearing debt in 2021 and RMB 2 billion to RMB 3 billion in 2022 and 2023, respectively, according to two sources who attended the event. Continue reading for our Asia Core Credit team's reporting on the Red Star Macalline Group Interest Bearing Debt situation, and request a trial to access legal and financial analysis of hundreds of other performing, stressed and distressed credits in the region. 

The company’s chairman Che Jianxing, CFO Xi Shichang and deputy chairman Guo Binghe were on hand during the meeting with investors.

For its RMB 1.5 billion corporate bond putable on July 13 “16 Hongmei 02” and its RMB 46.8 million corporate bond due July 13 “16 Hongmei 01,” the company plans to repay the bonds with its own cash resources or proceeds from its A-share private placement if it receives the proceeds by then.

Red Star remitted funds using its own cash resources to the China Securities Depository Clearing on June 8 to redeem RMB 1.999 billion put back to the company under its RMB 2 billion 5.35% corporate bond putable June 10 “19 Hong Mei 02,” as reported.

The management guided that for 2021, it expects to receive about RMB 5 billion to RMB 5.5 billion operating cash inflow, RMB 3.7 billion proceeds from its A-share private placement of which RMB 2 billion will be used to repay its debt, RMB 2.3 billion cash inflow from its logistics assets to Tianjin Yuanchuan and RMB 1 billion cash inflow from its private equity investment. It has also decided to cancel dividend payment for this year and lower its capital expenditure by spending only RMB 1 billion on construction of existing projects.

The company does not have any onshore issuance plan for 2021, although it has RMB 5.5 billion onshore issuance quota left which expires in late 2022. Given the appropriate market window, Red Star may consider issuing RMB 500 million to RMB 1 billion bonds this year. It does not plan to buy back any bond from the secondary market and plans to continue marketing new commercial mortgage-backed securities.

For the company’s sale of logistics assets to Tianjin Yuanchuan, Red Star has received RMB 1.3 billion proceeds on Monday, June 7, and it expects to receive another RMB 1 billion in late June or early July once it completes the relevant business and commercial registration changes.

Operation-wise, Red Star Macalline Group Corp. plans to open 58 new shopping malls in 2021 and 50 to 60 new shopping malls every year after that.

Regarding its debt structure, the company will lower the ratio of unsecured bonds so its interest-bearing debt will consist primarily of bank loans. It aims to lower its gearing ratio to about 50% within the next three years and return its offshore rating to investment grade within 1.5 years, management guided.

As of the end of 2020, Red Star Macalline Group Corp. had less than RMB 46 billion interest-bearing debt, which included RMB 29.9 billion bank loans with long tenors, more than RMB 8 billion bonds including offshore notes and about RMB 6 billion commercial mortgage-backed securities. Average financing cost was around 5%.

For its holdco Red Star Macalline Holding Group, Che said that the company will continue to expand collaboration with Sino-Ocean Capital, aiming to generate more proceeds than the RMB 1.03 billion that the agreement is designed to bring in. Future proceeds from the collaboration with Sino-Ocean Capital will be used to repay the holdco debt.

As reported, Sino-Ocean Capital has agreed to acquire an 18% stake of Chongqing Red Star Macalline Enterprise Development Co., including the Shanghai Red Star Macalline Real Estate Co. under Chongqing Red Star but excluding Shanghai Red Star Macalline Property Development Co., for RMB 1.03 billion.

Capital structure of Red Star Macalline Holding is as follows:



































































































































































































































































































































































































































































































































Red Star Macalline Holding Group - Pro Forma as of 05/07/2021


12/31/2020

EBITDA Multiple

(CNY in Millions)

Amount

US$ Amt.

Maturity

Rate

Book


Pledged Loans

3,055.9

473.0



Mortgage Loans

17,649.8

2,732.2



Guaranteed Loans

3,145.3

486.9



Credit Loans

1,495.1

231.4



Guaranteed Pledged Loans

4,294.3

664.7



Mortgage Pledged Loans

7,643.3

1,183.2



Mortgage Guaranteed Pledged Loans

10,378.6

1,606.6



Mortgage Guaranteed Loans

7,855.2

1,216.0



Total Bank and Other Loans

55,517.4

8,594.0

6.8x

19 PR Red Star Senior

694.0

107.4

Jul-30-2040

6.800%

19 Red Star Subordinated

50.0

7.7

Jul-30-2040


19 PR Sea A

1,669.7

258.5

Jan-25-2037

6.500%

19 Aegean Sea B

400.0

61.9

Jan-25-2037

7.500%

19 Aegean Sea Subordinated

200.0

31.0

Jan-25-2037


19 PR Red Star Furniture A

1,686.4

261.1

Jun-26-2040

5.800%

19 Red Star Furniture Subordinated

150.0

23.2

Jun-26-2040


19 Red Star Furniture B

410.0

63.5

Jun-26-2040

7.000%

20 Red Star Furniture Subordinated

30.0

4.6

Jun-28-2038


20 Red Star Furniture B

110.0

17.0

Jun-28-2038

6.000%

20 Red Star Furniture A

416.9

64.5

Jun-28-2038

5.500%

19 Red Star Furniture ABN001 Subordinated

10.0

1.5

May-07-2037


19 Red Star Furniture ABN001 Senior

1,277.1

197.7

May-07-2037

6.300%

18 PR Red Star Furniture A1

2,194.9

339.8

Dec-17-2036

5.800%

18 Red Star Furniture Subordinated

100.0

15.5

Dec-17-2036


18 Red Star Furniture A2

211.0

32.7

Dec-17-2036

6.300%

Total Onshore ABS

9,610.0

1,487.6

8.0x

20 Red Star 07

500.0

77.4

Dec-23-2025

7.000%

20 Red Star 02

400.0

61.9

Jan-21-2025

7.200%

17 Red Star 02

1,000.0

154.8

Nov-07-2024

6.500%

19 Red Star 01EB

4,359.4

674.8

May-14-2024

3.250%

21 Red Star 01 1

3,000.0

464.4

Nov-26-2023

6.880%

20 Red Star 05

2,500.0

387.0

Nov-26-2023

6.880%

20 Red Star 03

2,500.0

387.0

May-29-2023

6.820%

16 Red Star 02 2

-

-

Apr-28-2023

5.300%

18 Macalline MTN001 3

-

-

Mar-30-2023

6.440%

20 Red Star 01

600.0

92.9

Jan-21-2023

6.800%

17 Red Star 01

0.3

0.0

Nov-07-2022

6.800%

19 Red Star 03 4

-

-

Mar-26-2022

6.500%

19 Red Star 01 5

-

-

Jan-28-2022

6.500%

18 Macalline MTN002 6

-

-

Apr-26-2021

6.800%

20 Red Star Furniture 03

500.0

77.4

Oct-30-2023

6.200%

16 Red Star Furniture 02

1,500.0

232.2

Jul-13-2023

5.290%

19 Red Star Furniture 02

2,000.0

309.6

Jun-10-2023

5.350%

20 Red Star Furniture 02

500.0

77.4

Jun-03-2023

5.160%

20 Red Star Furniture 01

500.0

77.4

Mar-10-2023

4.950%

20 Red Mecalline MTN001

500.0

77.4

Jan-20-2023

5.700%

19 Red Maccaline MTN001

500.0

77.4

Jan-25-2022

5.750%

18 Macalline MTN001

500.0

77.4

Oct-24-2021

6.180%

16 Red Star Furniture 01

46.8

7.2

Jul-13-2021

5.400%

Total Onshore Bonds

21,406.5

3,313.7

10.6x

$300M USD 3.375% Senior Notes due on 2022

1,938.0

300.0

Sep-21-2022

3.375%

Total Offshore Senior Bonds

1,938.0

300.0

10.8x

Total Debt

88,471.9

13,695.3

10.8x

Less: Cash and Equivalents

(15,702.2)

(2,430.7)

Plus: Restricted Cash

1,194.9

185.0

Net Debt

73,964.5

11,449.6

9.0x

Operating Metrics

US$ Amt.

LTM Reported EBITDA

8,191.0

1,268.0


Liquidity

Plus: Cash and Equivalents

15,702.2

2,430.7

Less: Restricted Cash

(1,194.9)

(185.0)

Total Liquidity

14,507.4

2,245.7

Credit Metrics

Gross Leverage

10.8x

Net Leverage

9.0x

Notes:
Sources: Wind,Cbond,Company filings; 2020 EBITDA reported from company filings
1. Issued on March 8, 2021
2. Early redeemed on April 28, 2021
3. Early redeemed on March 30, 2021
4. Early redeemed on April 29, 2021
5. Early redeemed on January 28, 2021
6. Repaid upon maturity
Pro Forma: For Pro forma, the proceeds from the new bonds were added to cash as the exact use of proceeds for each of the bond raised remains unclear; The repayment for matured debts were subtracted from cash as the exact source of funding used to repay the debt remains unclear
US$ Translation: CNY/USD rate used for USD conversion is 6.46.


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