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Delong Department of funding is tight, in recent days, one of Delong's tricycle's Hunan torch and the pressure of the bank, Delong through the torch of the concept of integration of heavy vehicles began to crack.
Tightening funds
Under the influence of Delong, a major shareholder, the banks that had had a good relationship with the Hunan Torch began to tighten their ropes, making it difficult for the Hunan Torch to breathe. The Hunan Torch issued a public announcement on the recent situation through the China Securities Journal. The announcement reminded the bank to “run onâ€. The torch said frankly: "It is known that any large enterprise in the world cannot afford to run on the bank's run. This is the natural law of the economy and society. Although the Hunan Torch has billions of assets and billions of sales revenue, it cannot be an exception. Because the bank's 'running' leads to abnormal production and operation of the company, its chain reaction will be incalculable. The result will be the minimization of corporate interests, banking interests and social interests."
Fortunately, most banks eventually calm down, maintain good communication with the company, and discuss countermeasures.
The crisis was caused by China Merchants Bank’s suing the torch to court. On April 29, the Higher People’s Court of Hunan Province accepted cases of overdue arrears from China Merchants Bank Co., Ltd. Changsha Branch against the company and its controlling subsidiaries Shaanxi Fast Gear Co., Ltd. and Shaanxi Heavy Vehicle Co., Ltd. The Higher People’s Court of Hunan Province made a civil ruling on the same day. The decision was made to freeze the Renminbi deposit of RMB 200 million in the bank of the respondent Hunan Torch, Shaanxi Fast Gear Co., Ltd., and Shaanxi Heavy Truck Co., Ltd. or seize other assets of equivalent value. The hospital has now frozen the bank's basic accounts of Shaanxi Fast Gear Co., Ltd. and Shaanxi Heavy Truck Co., Ltd.
From January 1, 2004 to the present, the bank has accumulatively collected loans from the Hunan Torch up to 2.4796 billion yuan, while the new loans were 0. There is no doubt that the Hunan Torch is facing a severe exercise in funding.
Old wounds and sores
The financial pressure has caused the Hunan Torch to develop its layout on heavy vehicles. After the court frozen the bank's basic account of Shaanxi Heavy-duty Truck Co., Ltd., Hunan Torch admits that this will affect the operation of the subsidiary.
The reporter learned from Shaanxi Heavy-Duty Truck Co., Ltd. that the construction of the new base of Shaanxi Heavy Industries and Steel has entered a critical period. The first craft workshop of one of the four major workshops has already entered the phase of groundbreaking. According to the plan, by the end of May next year, Shaanxi Heavy-duty will occupy an area. Thousands of new bases will be put into production. The total investment of the project is 850 million yuan. However, in this section, the capital issue of the Hunan Torch has implicated the freezing of Shaw Oils' assets and account numbers. The ambitious plan for the expansion of Shaanxi Heavy Industry will be greatly reduced. A person in the company said: This matter will have more or less adverse impact on SSA.
The situation of Hunan Hongyan Automobile Co., Ltd., another enterprise of Hunan Torch Holdings, is not very optimistic. The relevant person in the company's propaganda department stated that: In the first quarter, the company’s heavy-duty vehicles produced more than 4,000 vehicles, an increase of only a few percentage points from the same period last year, and the increase from April to now is not significant. The person said: At present, the Hunan Torch Incident has not had a substantial impact on the company, but its future development may constitute a certain obstacle. “Where think of Deron would be like this today.†It is understood that in fact, as early as in 2002 when Chongqing Heavy Duty Truck “married†the Hunan torch, some employees had expressed their concerns: “Hunan Torch is just an investment company, investment Just to make money, how far can it lead Chongqing Heavy Duty Truck?"
Cracks appear
Although Delong’s financial difficulties and the cash pressure of its Hunan Torch have not yet been fully transmitted to Shaanxi Heavy Duty Truck and Chongqing Heavy Duty Truck, it now appears that DeLong’s ambition to make a big impression in the heavy-duty auto industry is a puzzle.
As early as 2002, Delong had the intention of starting its layout in the heavy-duty vehicle market through its listed company, the Hunan Torch. On August 1, 2002, the Hunan Torch signed an agreement with Shaanxi Automobile Group. The two sides jointly established Shaanxi Heavy Vehicle Co., Ltd., with a registered capital of 490 million yuan. The Hunan Torch invested 250 million yuan in cash, accounting for 51% of the registered capital. Then in September 2002, the Hunan Torch and Shaanxi Automobile established Shaanxi Heavy Vehicle Co., Ltd. In December 2002, the Hunan Torch Co., Ltd. and Chongqing Heavy Auto Co., Ltd. jointly established Chongqing Hongyan Automobile Co., Ltd., and Hunan Torch also holds 51%. As a result, the Hunan Torch smoothly incorporated two of the oldest Chinese heavy-duty vehicles.
Of course, after the Hunan Torch was incorporated into the two companies, Shaanxi Heavy Duty Truck and Chongqing Hongyan did receive substantial financial support, and they carried out equipment upgrades and technological transformations. These laid the foundation for the development of Shaanxi Heavy Duty Truck and Chongqing Hongyan. Shaanxi Zhongqi has proposed to make heavy vehicle production and sales reach 30,000 units in 2006, and its sales revenue will exceed 10 billion yuan. Chongqing Hongyan claimed that in the next five years, it will achieve annual production and sales of 50,000 heavy-duty vehicles and sales revenue of 12 billion yuan, and build the company into a heavy-duty vehicle base that plays a decisive role in the international market.
“With the tightening of the Hunan Torch Fund, everything is full of uncertainties,†said Dong Jianhua, a researcher at Southwest Securities Beijing R&D Center. “Under such uncertain factors, the competition in the domestic heavy-duty vehicle market has not stopped. Forces such as Futian are rapidly developing, and China National Heavy Duty Trucks, FAW, and FAW are also steadily advancing in heavy-duty vehicles, which will pose a threat to the two old-time heavy-duty auto companies."
A person from Chongqing Hongyan revealed to reporters: “There were more than 10 companies that had been negotiating with Chongqing Zhongqi before the cooperation with the Hunan Torch. Now there are also companies that are in touch with us because we have a market and we have manufacturing capabilities.†Clearly, Uncertainty has caused the layout of the Hunan Torch integration of heavy vehicles to crack.
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