Tsinghua Unigroup Plans to Announce Entering In-Court Bankruptcy After Tsinghua University’s 110th Anniversary Celebration Ending on April 25; Shanghai SOE No Longer Pursuing Deal for Unigroup Subsidiary Unisoc; Beijing SOE Likely to Continue Negotiation as Potential Investor in Unigroup

Tsinghua Unigroup plans to announce that it would enter in-court bankruptcy proceedings after Tsinghua University completes celebrating its 110th anniversary, said two sources familiar with the matter. The university’s anniversary celebration this year features two-week events that conclude on April 25, according to its website. Continue reading for our Asia Core Credit team's update as Tsinghua Unigroup plans to enter in-court bankruptcy proceedings and click through here for access to our most recent analysis on the Tsinghua Unigroup bankruptcy situation: https://app.reorg.com/v3#/items/intel/9131?item_id=157858

The working group that oversees Tsinghua Unigroup’s operations decided in late March that the company should enter in-court restructuring as opposed to pursuing out-of-court restructuring, said a third and a fourth sources familiar with the matter.

The working group has yet to finalize a restructuring plan as Unigroup has not made significant progress in asset restructuring or the introduction of strategic investors, said the third and fourth sources.

In-court proceedings will enhance the efficiency of Unigroup’s restructuring, given the complexity of its debt structure and creditor makeup that makes it difficult to reach agreement with creditors out of court, said the third and fourth source.

As reported, the working group, which consists of officials from the Beijing municipal government, regulators and executives of controlling shareholder Tsinghua Holdings, earlier sought feedback from the company creditors’ committee on three proposals, including two for court-supervised proceedings and the third for out-of-court settlements.

A company spokesperson said the working group has made significant progress but declined to comment on the bankruptcy proceedings.

Introduction of Strategic Investors

Meanwhile, prospect is dimming that a company backed by Shanghai State-Owned Assets Supervision and Administration Commission will continue to pursue an acquisition of Unigroup subsidiary Unisoc (Shanghai) Technologies Co., according to the first and third source. It could not be learned immediately why a deal with the Shanghai state-owned company may not materialize.

As reported, Tsinghua Unigroup has been contemplating selling part or all of its roughly 39% indirectly held stake in Unisoc (Shanghai) Technologies Co., of which the Shanghai SOE was a suitor.

Another prospective strategic investor in Unigroup, a company backed by Beijing State-Owned Assets Supervision and Administration Commission, will likely remain in the fold as government officials have suggested that a hometown company is better positioned to invest in Beijing-based Unigroup, said a fifth and a sixth sources familiar with the situation.

Unigroup had previously been in talks with state-owned enterprises based in Beijing and Shenzhen, as reported.

The Beijing municipal government recently released a three-year plan for reforming state-owned enterprises in the capital city, which stipulates that the government will guide the SOEs to focus on industries with cutting-edge technologies, carry out core-technology research and accelerate the industrialization of innovative technologies. Sources pointed to the plan as a possible reason for the Beijing company’s interest in Unigroup.

Below is the capital structure of Tsinghua Unigroup: