Opportunity or trap of the hottest Forest Pulp pap

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Forest Pulp paper integration: opportunities or traps (Part 2)

Part 2: expansion after the crisis

obviously, the focus of public attention on the forest pulp paper integration project invested and constructed by Jinguang (China) in Yunnan this time is still on the possible damage to the ecological environment caused by the project. However, apart from potential environmental risks, there are no other risks? Or is environmental risk the biggest risk of the project

large scale debt finally led to app debt.

the golden light group founded by eKa tjita Widjaja family is one of the largest chaebols in Indonesia, and app registered in Singapore is its flagship enterprise, which was listed on the New York Stock Exchange in April 1995

app obtained a large area of Indonesia's native forests and operated in debt. On the one hand, it borrowed and financed on a large scale internationally, driving more than 10 billion dollars of international capital to invest in Indonesia's pulp and paper industry; On the one hand, it invested in Indonesia and China, and quickly rose to become a famous paper-making enterprise in Asia

at the end of 1999, when the debt scale has exceeded US $13billion, APP began to relieve the debt pressure by selling non core assets and suspending the expansion of production capacity. However, the subsequent decline in global paper products and pulp prices made app's debt reduction attempt unsuccessful

under the pressure of paying nearly $1.5 billion in interest in 2001, APP announced on March 12 of that year that it would stop all debt and interest payments. App finally broke out in debt crisis, and has entered into long negotiations with international creditor banks since then. In July, 2001, app, which was owned by Jinguang group with a shareholding of 6870, was delisted by the New York Stock Exchange

app, with unprecedented debt scale and extremely complex debt structure, has its core assets and main businesses distributed in Indonesia and China. China is also where app makes the most efforts to expand its overseas business. The four major paper-making enterprises in East China, Jindong, Ningbo Zhonghua, jinhongye and jinhuasheng, are called "Rolls Royce style factories"

when the company was deeply in debt crisis in 2001, APP China business was once on the verge of being sold as a whole. It is said that app's Chinese assets are the most valuable part of its overall assets, with sales of $1.46 billion and operating profit of nearly $200million in 2002

in the second half of 2002, perhaps due to the debt restructuring negotiations with international creditor banks, APP transferred all its Chinese businesses and assets to Jinguang (China)

according to the survey of Caijing, Jingguang (China) was wholly-owned by app China Holdings Co., Ltd. in Shanghai in February 1999. However, the shareholder of Jinguang (China) has been transferred from Mauritius to Bermuda. If only based on the public equity records, we can't see the equity association between golden light (China) and app's Electromechanical, accessories, sheet metal, board cards, sensors and other equity - its parent company is not included in the list of app's subsidiaries or shareholders. However, insiders agree that app registered in Singapore is still the ultimate controlling shareholder of golden light (China), and its legal representative is still Huang Zhiyuan, the president of app

from the analysis of various situations, some experts believe that rather than regard the transfer of app's Chinese business and assets to Jinguang (China) as an ordinary asset transaction, it is better to regard it as a structural arrangement made by app to revitalize its Chinese business as soon as possible when the debt crisis is deep

app it is estimated that the debt restructuring of US $13.9 billion is known as the largest restructuring case in the history of emerging markets. It is also a test of the level of rule of law in Indonesia and emerging markets, and has become a new focus of international financial and capital markets

industry analysts generally believe that when the debt dispute and asset restructuring have not yet made a substantial breakthrough, the various arrangements made by app for its assets in China are actually spin offs, intended to separate app China Holdings Limited and its subsidiaries in Bermuda from the rest of app, so that the remaining international creditors of app will not be able to pursue the effective assets that should be used for debt repayment

in fact, it is difficult for people to learn more detailed and specific internal truth, but in any case, it is an indisputable fact that all app businesses in China have been under the name of golden light (China) after the crisis

the debt crisis has obviously also affected app business in China. In February, 2001, APP announced that it was unable to inject capital, and Hainan Jinhai Pulp and paper forest Co., Ltd., established in 1995, was immediately shelved. At the Boao Forum for Asia in 2002, Hainan Province proposed to resume the project. In this regard, the opinion of the State Development Planning Commission at that time was that app enterprises in China were allowed to contribute to the Jinhai Pulp project before repayment, but they must be approved by the international creditor bank in advance

after the restart at the end of 2002, the project has become a foreign-invested project with a total investment of 13billion yuan. Of course, app does not have such strong financial strength, "the project operation is inseparable from the credit support of domestic banks" is the general expectation of industry insiders

if the restart of Jinhai Pulp can be regarded as the "comeback" of app, then the restart of Jinhai Pulp is only the beginning and a small part of its re expansion of business in China

however, strictly speaking, it is no longer app that "makes a comeback", but Jinguang (China). The former is still stuck in debt negotiations with international creditor banks, while the latter has become the owner of all app assets in China

in 2003, after the restart of Jinhai Pulp, Jinguang (China) suddenly entered a period of rapid expansion in China. In addition to the amazing Forest Pulp paper integration project cooperation with Yunnan, its cooperation with Guangxi is not small at all. "Why didn't the Guangxi project attract public attention, while the Yunnan project made a lot of noise?" This is unknown

Guangxi reported last year, "In mid July, the leaders of the autonomous region government met with Mr. Huang Zhiyuan, President of Indonesia golden light group, and the two sides reached a cooperation intention on the completion and implementation of the Forest Pulp and paper integration project in Guangxi. Recently, from Indonesia golden light group Asia Pulp and Paper Co., Ltd. (app for short) Guangxi business division learned that app China business headquarters intends to build China's largest forest pulp paper integration project base in Guangxi, with a total planned investment of 50billion yuan, to build 600000 hectares of industrial commercial forest in Guangxi, and to build a large pulp plant with an annual output of 1.8 million tons and a large paper plant with an annual output of 3.1 million tons. The intended total investment in Guangxi is three times the total investment of APP in Hainan Forest Pulp paper integration project. "

2 several experimental pieces are tested as a continuation of a batch of experiments. When querying the overall strength deviation of a batch of experimental pieces, they are calculated and disposed. Since 2003, Jinguang (China) plans to invest more than 90billion yuan in China, and the construction area of its supporting pulp forest base is more than 40million mu. 40million mu of land has been partially covered in the first part of this article. Where does the 90billion yuan fund come from

did app's business in China before the debt crisis develop quite well, or even make a lot of profits

in February, 2001, due to his inability to contribute, Huang Zhiyuan wrote a letter requesting Hainan Province to shelve the Jinhai Pulp project. According to the letter, the financial structure of APP in China is as follows: app has invested US $1.2 billion in capital from abroad, the long-term export credit guaranteed by app is US $700million, and the credit funds provided by Chinese banks are about US $1.7 billion

in other words, before the debt crisis broke out, app's total loans to Chinese commercial banks were about $1.7 billion. In addition, according to the data published by the media, "the total assets of APP China are only $1.4 billion", and "another $401 million is the receivables of related companies that are difficult to recover"

that is to say, insolvency should be the overall business status of APP in China when it was in debt crisis. Born out of app, which is burdened with tens of billions of dollars of debt, is still arguing with international creditors about the debt restructuring plan, and even is entangled in lawsuits, golden light (China) has set off a new round of investment climax in China, and may have to rely on the traditional debt management model

so, Is it true, as the expert said, "who can guarantee that today, when international creditors have no choice, is not the tomorrow of Chinese creditors?

borrowing is like a helpless choice for Chengchen's investment project to carry out market operation.

it should be said that after the outbreak of a large-scale debt crisis in app, people really don't have enough confidence to value its successor, Jin Guang (China) Investment intention in China on such a scale. This even surprised the domestic financial industry that had dealt with app. A senior person in the investment community who had considered acquiring its business in China during the app debt crisis called this "horse racing enclosure", with the purpose of seizing the forest resources of China's limited Yilin provinces

both the 50 billion yuan investment plan of Jinguang (China) in Guangxi and the 26 million mu fast-growing forest base plan in Yunnan are at an early stage. Although the success or failure of the project is still uncertain, people feel that it is more obvious that it seems to be potential risks rather than opportunities

the forestry pulp paper integration of afforestation, pulping and papermaking is originally a capital intensive industry. The front has been stretched for a long time, and the scale has been so large that the outside world has not felt its strong financial strength, and the risk seems to be obvious

it is also worth pointing out that from the perspective of capital credit, information asymmetry further aggravates the risk

the root cause of app's debt crisis in 2001 was excessive investment, and the cash flow generated by the project was insufficient to repay the loan interest; Before the crisis, app's loans in China were generally applied to the local branches of major banks by its four paper mills in Jiangsu and Zhejiang. Therefore, the overall financial situation of app's business in China of many domestic banks is still unclear

obviously, domestic banks may not be able to accurately judge whether their asset profits are sufficient to support the current expansion

after the comprehensive public market information of the media, it is asserted that "domestic app creditor banks are still in high risk at present." What supports this is that the insolvent enterprise has announced several new projects (i.e. Yunnan and Guangxi projects that contribute to local economic development) that have temporarily stabilized after the steel-making pig iron market fell since 2003, involving tens of billions of yuan of investment, and its main financing channels are only domestic banks. Therefore, "the possible risks of China's banking sector may be more serious than general estimates."

before the debt crisis broke out in app, China Development Bank signed a loan contract with app jinhaijiang project, which was suspended for some reason. An industrial report made by the bank in 2002 estimated that taking a 600000 ton pulp mill as an example, it needs to be equipped with a 2million Mu pulp forest base, which generally takes 10 to 14 years and needs to be carried out before the construction of the pulp mill. The afforestation cost per mu is about 500 yuan, with a total cost of more than 10billion yuan. Even if the ratio of self raised funds to credit funds is 3:7, few enterprises have enough capacity to support the construction of 40million Mu pulp forest base

if large-scale borrowing really becomes an inevitable and helpless move of Jinguang (China) in the future, the success of its proposed huge project depends on financing. Perhaps, it is unknown that the capital risk is far greater than the environmental risk

"investors cut one crop and two crops. When this land cannot produce economies of scale, they can't cut it down and can leave. Officials have served one or two terms. If they can't do it, they can also leave. As a result, only generations of people live here

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