Sino Grandness

[portuser]

Sino Grandness Food Industry Group Limited (SGFI) is the guarantor of 2011 and 2012 bonds. 

If Garden Fresh fails to pay up, bondholders will go after SGFI. That is why the board of SGFI had to make sure that Garden Fresh has the means to pay RMB 108m by 31 May 2016.  

The board made the recommendation to pay a dividend after reviewing 2015 results in Feb 2016 and pass the board resolution to the subsidiary that is required to declare dividend. The subsidiary then sought approval from the Chinese authority to remit the dividend to SGFI. 

By 31 Mar 2016, SGFI had yet to receive the dividend from the subsidiary. You may call the company to know that the money is in now for payment of dividend to SGFI shareholders on 6 June.

[Bluechipfan]

Sino Grandness Food Industry Group Limited (SGFI) is the guarantor of 2011 and 2012 bonds. 

If Garden Fresh fails to pay up, bondholders will go after SGFI. That is why the board of SGFI had to make sure that Garden Fresh has the means to pay RMB 108m by 31 May 2016.  

The board made the recommendation to pay a dividend after reviewing 2015 results in Feb 2016 and pass the board resolution to the subsidiary that is required to declare dividend. The subsidiary then sought approval from the Chinese authority to remit the dividend to SGFI. 

By 31 Mar 2016, SGFI had yet to receive the dividend from the subsidiary. You may call the company to know that the money is in now for payment of dividend to SGFI shareholders on 6 June.

I will be happy to receive my dividend on 6 June! After that just wait for the news on the development of the IPO application. There is no guarantee in life except death and tax but I am cautiously optimistic that the IPO will come to fruition.

[crubs]

Specuvestor's post #1721 is misleading

"There's still a backlog of A1 yet to get PHIP, and can be due to discretionary or non-discretionary reasons"

A backlog has nothing to do with a company's ability to get PHIP. Earlier applicants do not have to be cleared before the ones after can receive approval. 

Example:
BOC Aviation submitted its A1 on March 4 2016 and got the PHIP on 24 April 2016.

Some others who have submitted the approval earlier have yet to receive the PHIP.

[specuvestor]

^^^

I'm not sure why people keep looking at July for IPO when there are still outstanding A1 from Dec 2015. It could be July, it could be September if at all.

Thats the context of my statement. I'm not saying the backlog has to clear first. It could be for discretionary reasons eg no hurry since market sentiment is bad. But neither should people expect Garden Fresh to list in July as given.

The BOC in BOC aviation stands for Bank of China. I would presume the hearing should be easier for them.

Sino Grandness Food Industry Group Limited (SGFI) is the guarantor of 2011 and 2012 bonds. 

If Garden Fresh fails to pay up, bondholders will go after SGFI. That is why the board of SGFI had to make sure that Garden Fresh has the means to pay RMB 108m by 31 May 2016.  

The board made the recommendation to pay a dividend after reviewing 2015 results in Feb 2016 and pass the board resolution to the subsidiary that is required to declare dividend. The subsidiary then sought approval from the Chinese authority to remit the dividend to SGFI. 

By 31 Mar 2016, SGFI had yet to receive the dividend from the subsidiary. You may call the company to know that the money is in now for payment of dividend to SGFI shareholders on 6 June.

If i read the Garden Fresh prospectus correctly, there is no more guarantee post restructuring. Either way it is meaningless cause they defaulted the 2 EB anyway and SGFI paid nothing cause there is little cash at the company level anyway. The main asset is still Garden Fresh IPO.

The board decided to pay dividend after reviewing 2015 results that has no "non-accumulated" profit? Obviously I'm the one in AGM who heard the discussion that 1) the dividend payment is equivalent to 10% of Grandness profit which is the minimum they promised to pay TTA as dividend and 2) auditor said they can pay dividend from 1Q16 even if 2015 has no profit on a company level (which i disagree and yes it is enlightening to understand the New Toyo treatment but unfortunately somewhat irrelevant to SGFI cause New Toyo did have annual profit on a company level. And yes i will query with SGX and ACRA as and when i like it)

Instead of receiving dividend from Grandness i would hazard a guess that the 2Q listco balance sheet will show $20m increase in "investment into subsidiary" and $20m decrease in "loan to subsidiary".

[portuser]

Specuvestor wrote:

"If i read the Garden Fresh prospectus correctly, there is no more guarantee post restructuring. Either way it is meaningless cause they defaulted the 2 EB anyway and SGFI paid nothing"


If bondholders had bad experience with Garden Fresh which 'defaulted' before, why did they allow Sino Grandness Food Industry (SGFI) to stand down as a guarantor? Why did they forego a layer of protection?

The text at the end of this post shows SGFI was required to be the guarantor for 2012 bonds. (The text for 2011 bonds is identical.) 

When the bonds were restructured on 1 March 2016, SGFI did not stand down -- see text of SGFI's announcement at the end of this post.

Can you indicate which part of the Garden Fresh prospectus states that Sino Grandness Food Industry is no longer required to be a guarantor? Or was it that you could not find in the prospectus mention of guarantee at all? It is important for us to know.

The following accounts suggest that it was unlikely that existing bondholders had demanded redemption. 

When 2011 bonds matured on 19 Oct 2014, principal amount of RMB 19.5m was redeemed. CDIB, linked to a Taiwanese bank, exercised the option (provided in the bond agreement) to extend the maturity of RMB 80.5m to 30 June 2015. 

CDIB later extended the maturity by 25 days, to 25 July 2015, to coincide with that of 2012 bonds.

On various occasions, CEO had assured edgy shareholders that he was negotiating with bondholders to lower their potential aggregate stake in Garden Fresh. He also said bondholders were not asking for redemption because they were hopeful of submission of A1 form. 

In 2015, Sino Grandness group spent RMB 717m on capex, when redemption on 25 July 2015 would have cost RMB 650m.

We witnessed on 1 March 2016 that following the restructuring of 2011 and 2012 bonds, bondholders' aggregate stake in Garden Fresh was reduced to 14.7%, from 23.4% originally. A month later, A1 form was filed by DBS.

As for your contention that SGFI had acted wrongly to pay dividend for 2015 when SGFI did not have a profit in that year, it will be good to get answers from SGX and ACRA. I note that you "will query with SGX and ACRA as and when [you] like it". 

.....................................................................................................
(I) Page 13 of the circular issued by SGFI dated 4 July 2012: 

3.2.3 The Deed of Guarantee
Pursuant to the Deed of Guarantee, the Company will unconditionally and irrevocably guarantee the due and punctual payments of all sums expressed to be payable by the HK Holding Company, the HK Issuer and the WFOEs and Mr. Huang Yupeng under the relevant transaction documents in relation to the Convertible Bonds.

(II) When the bonds were restructured, SGFI continues to stand as guarantor -- page 9 of SGFI's announcement dated 1 March 16:

"(D) New Cayco 2012 Guarantee and Guarantor Guarantee
The New Cayco shall guarantee the HK Issuer’s performance of all of the obligations of the Issuer in relation to the Holders’ Exchange Right by entry into the New Cayco 2012 Deed of Guarantee. The Company shall guarantee the Issuer’s performance of all of the obligations of the Issuer in relation to the 2012 Holders’ Exchange Right, the 2012 SB1 Bonds and the 2012 SB2 Bonds by entry into the Guarantor Deed of Guarantee." 

[crubs]

Specuvestor,

We've had the discussion on default before. Sino Grandness did not default, you insisted that it be called as such.

A default occurs when an "Event of Default" is announced.

The recent Ausgroup default is an example

"The Company intends to seek waivers from holders of the unsecured Notes (“Noteholders”) in relation to the breach and Event of Default. There is no assurance that the waivers will be granted and, if granted, on terms and conditions that are acceptable to the Group."

Sino Grandness made no announcement which stated that it defaulted. It is wrong to assume they defaulted when negotiations of the CB restructuring extended past the original due date. They were in discussion before the deadline anyway.

By the way, its CBs not EBs. EBs only arose after the restructuring.

[specuvestor]

^^ I specifically used the word default because that is what I had stated clearly in the previous discussion. If the bond had been rated, the rating agencies are not going to wait for them to issue an announcement to declare it default post grace period. Makes no sense that you keep insisting a borrower has the right "not to default" just because it doesn't issue a statement? The so-called statement you cling on to is required by SGX for material information. The information has however happened. You might want to read the portion in the AP on "Event of Default" whether that includes announcements.

It is true that the borrower did not issue a legal claim on the default or demanded redemption (as per portuser). I've never disputed the fact so please don't build a strawman. That doesn't mean it is not in default but it means creditors are not pursuing it legally. That's why it is called "restructuring" not "refinancing". Please also refer when did they issue statement claiming they were in discussion BEFORE the payment dates of Sept 2014 and July 2015 (not the extended date of June 2015). Management had said in 2015 AGM they were going to fully repay the creditors... what discussions?

Technically it has always been an EB cause the issuing party is not necessarily the listco. That's why nobody converts cause nobody know for sure which is the listco.

(II) When the bonds were restructured, SGFI continues to stand as guarantor -- page 9 of SGFI's announcement dated 1 March 16:

"(D) New Cayco 2012 Guarantee and Guarantor Guarantee
[size=small]The New Cayco shall guarantee the HK Issuer’s performance of all of the obligations of the Issuer in relation to the Holders’ Exchange Right by entry into the New Cayco 2012 Deed of Guarantee. The Company shall guarantee the Issuer’s performance of all of the obligations of the Issuer in relation to the 2012 Holders’ Exchange Right, the 2012 SB1 Bonds and the 2012 SB2 Bonds by entry into the Guarantor Deed of Guarantee."

Why? Maybe because if you are the creditor you might notice there is no cash in the Singapore listco?

I read from page 96 of the AP. In any case like I said it is meaningless cause the biggest asset is in China and unlisted. If it gets listed the guarantee is irrelevant.

The new Cayco is Garden Fresh intended Listco in HK

NB: I see the guarantee clause by SFGI at the bottom of page 122 of the AP which I overlooked, that's my bad. So irrelevant as it is, it is still guaranteed by SFGI.

[portuser]

Specuvestor wrote:

"I see the guarantee clause by SFGI at the bottom of page 122 of the AP which I overlooked, that's my bad. So irrelevant as it is, it is still guaranteed by SFGI."

You might have overlooked the small prints in page 122. But did you overlook page 117 which states that Sino Grandness is the guarantor in normal print?

Please also note that clause (F) in page 116 provides that attempt by Sino Grandness to wriggle out of the guarantee triggers a default.

In post 1733, I said SGFI guarantees the bonds. You disputed this (post 1736). When you realise your mistake, you brush off saying that it is irrelevant. 

[specuvestor]

#1736 I already said either way it is meaningless. If this is an important point to you please pursue and state why it is not meaningless rather than say brushing off

The note you posted is about Cayco and doesn't justify your point either. Nor anything relevant in your point of "demanding redemption". I prefer to major on the bigger things like cashflows and why management do what it does.

Specuvestor wrote:

"I see the guarantee clause by SFGI at the bottom of page 122 of the AP which I overlooked, that's my bad. So irrelevant as it is, it is still guaranteed by SFGI."

You might have overlooked the small prints in page 122. But did you overlook page 117 which states that Sino Grandness is the guarantor in normal print?

Please also note that clause (F) in page 116 provides that attempt by Sino Grandness to wriggle out of the guarantee triggers a default.

In post 1733, I said SGFI guarantees the bonds. You disputed this (post 1736). When you realise your mistake, you brush off saying that it is irrelevant.

[portuser]

Specuvestor

Your point is that  "they defaulted the 2 EB anyway and SGFI paid nothing" 

You have also asked whether "they issue statement claiming they were in discussion BEFORE the payment dates of Sept 2014 and July 2015 (not the extended date of June 2015)".

I am surprised that in your due diligence you have overlooked the following:

22 July 2015 announcement 
Further to the announcement dated 26 June 2015, the Board of Directors of Sino Grandness Food Industry Group Limited (the “Company”) wishes to announce that the Company is in discussion with CB1 bondholders holding RMB80,500,000 in principal amount and CB2 bondholders holding RMB270,000,000 in principal amount of convertible bonds in relation to a potential extension of the maturity date of the convertible bonds on 25 July 2015. The extension is subject to certain conditions, details of which are being discussed between the Company and the bondholders.