Tianqi lithium’s shareholders reduced their holdings four times in half a year

On October 20, Tianqi lithium disclosed the third quarter report of 2020. In the first three quarters of this year, the company achieved operating revenue of 2.427 billion yuan, a year-on-year decrease of 36.09%, and the net profit attributable to the parent company dropped sharply from 139 million yuan in the same period of last year to – 1.103 billion yuan, from profit to loss. Among them, the third quarter continued to lose 407 million yuan. < p > < p > two years ago, a “snake swallowing elephant” overseas merger and acquisition made Tianqi lithium (002466. SZ), Asia’s largest lithium product manufacturer, into an unprecedented predicament. On October 20, Tianqi lithium disclosed the third quarter report of 2020. In the first three quarters of this year, the company achieved operating revenue of 2.427 billion yuan, a year-on-year decrease of 36.09%, and the net profit attributable to the parent company dropped sharply from 139 million yuan in the same period of last year to – 1.103 billion yuan, from profit to loss. Among them, the third quarter continued to lose 407 million yuan. < / P > < p > due to the loss of RMB 5.983 billion in 2019, if the company fails to turn the loss into profit in 2020, Tianqi lithium may trigger delisting risk warning after the disclosure of the company’s annual report. To make matters worse, Tianqi lithium will have debts of up to 1.884 billion US dollars (about 12.593 billion yuan) due in November this year. However, according to the third quarter report, as of September 30, the company has only 1.295 billion yuan of monetary capital on its books. < / P > < p > on the issue of debt repayment and other related issues, on October 23, the reporter of time weekly put forward an interview request to Tianqi lithium industry. The staff of the board of directors Office of the company said that the information disclosed by the company to the outside shall prevail. < / P > < p > maybe it is the success of acquiring talison lithium Ltd., a lithium mining giant, seven years ago, which makes Tianqi lithium have full confidence in the “snake swallowing elephant” M & A. Since the acquisition, Tianqi lithium has quickly solved the debt pressure and made huge profits in the soaring lithium product cycle. According to the data, Tianqi lithium industry was established in 2004, and its main business includes the research and development, production and sales of lithium minerals, lithium chemical products, lithium carbonate and other lithium series products. According to the 2012 financial report, the total assets and net profit of Tianqi lithium industry were 1.569 billion yuan and 42 million yuan respectively. Talison, on the other hand, owns the world’s highest grade and largest reserves of spodumene, accounting for about 35% of the global lithium resource supply market share, and is also the only raw material source of Tianqi lithium industry for a long time. In 2013, Chengdu Tianqi industry (Group) Co., Ltd. (hereinafter referred to as Tianqi group), the controlling shareholder of Tianqi lithium, entered talison with a total of 3.413 billion yuan. After that, Tianqi lithium Co., Ltd. acquired 51% of talison’s equity into the listed company through fixed increase, and completed the first “snake swallowing elephant” merger and acquisition. < / P > < p > with the take-off of new energy vehicle market, the performance of Tianqi lithium industry has achieved rapid growth. From 2014 to 2017, Tianqi lithium’s net profit attributable to the parent company increased from RMB 131 million to RMB 2.145 billion, and the net cash flow from operation increased from RMB 302 million to RMB 3.094 billion. During this period, its asset liability ratio has been kept below 50%. < p > < p > five years later, Tianqi lithium once again planned a “snake swallowing elephant” merger, and the scale was even larger. In 2017, Tianqi lithium, with net assets of less than 11 billion yuan, acquired 23.77% of shares of Chile chemical mining company (sqm. N, hereinafter referred to as “sqm”) listed in the United States with us $4.066 billion (about 27.178 billion yuan), becoming its second largest shareholder, holding 25.86% shares in total. According to the information disclosed by Tianqi Lithium Industry Co., Ltd., sqm is one of the world’s leading producers of lithium carbonate and lithium hydroxide. Its salt lake assets located in Atacama, Chile, is the lithium salt lake with the highest lithium concentration, the largest reserves and the most mature mining conditions in the world. However, the company will not face significant liquidity risk after the completion of the company’s debt restructuring in June 2018. “The net profit of the company in 2017 and the net cash flow generated from operating activities are sufficient to cover the interest of M & A financing.” Tianqi lithium said in its reply. Before the acquisition of sqm, Tianqi lithium had predicted in the major asset purchase report that the net profits of sqm in 019, 2020, 2021 and 2022 would reach 578 million US dollars, 937 million US dollars, 1146 million US dollars and 1.721 billion US dollars respectively. < / P > < p > things go against our wishes. Since 2019, due to the impact of industry adjustment and the downward trend of lithium price, the operating performance of sqm has declined more than expected. According to the joint venture financial information disclosed by Tianqi lithium, the net profit of sqm in 2019 is 1.561 billion yuan (about USD 234 million), a sharp decrease of 46.47% compared with that in 2018. < p > < p > based on 25.86% equity, sqm’s profit contribution is 404 million yuan. The interest expense of sqm M M & a loan is about 1.65 billion yuan, which is even greater than the profit of sqm in 2009. < / P > < p > under comprehensive consideration, in 2019, Tianqi lithium made provision for impairment of sqm by about 5.279 billion yuan. As a result, Tianqi lithium lost 5.983 billion yuan of net profit due to its parent in 2019, while it made a profit of 2.2 billion yuan in the same period of 2018. According to the three quarterly reports, from January to September 2020, the gross profit rate of Tianqi lithium industry decreased from 58.56% in the same period of last year to 44.69%, and showed a trend of quarterly decline. The net interest rate dropped directly from 16.32% to – 23.57%, and the average return on net assets also decreased from 1.37% to – 17.22%. < p > < p > in order to relieve the debt pressure, Tianqi lithium had planned to issue H shares. In November 2018, Tianqi lithium was approved by the CSRC to issue no more than 328 million H shares. However, the above approval expired in November 2019, and the plan to issue H shares failed. < p > < p > after the H-share issuance suffered setbacks, Tianqi lithium turned to issue shares to raise funds. In December 2019, Tianqi lithium sold 335 million shares before and after, and raised 2.932 billion yuan of funds. However, it only paid off the principal of overseas syndicated loans in advance, about US $416 million. < / P > < p > according to the information disclosed in 2018, of the US $3.5 billion M & A financing, US $2.3 billion will mature in November 2020. After prepayment of US $416 million, there is still $1.884 billion (about 12.593 billion yuan) to be repaid. As of September 30, 2020, Tianqi lithium has only 1.295 billion yuan of monetary capital. < p > < p > in addition, Tianqi lithium will suspend the payment of some M & a loan interest in 2020. As of September 30, 2020, the accumulated outstanding interest amount of syndicated M & A loans is about RMB 464 million. < p > < p > on September 30, 2020, Tianqi lithium issued a risk warning announcement, saying that due to the influence of US $3.5 billion M & a loan, cyclical adjustment of the industry, and the continuous decline of the company’s main product prices, the company’s financial expenses increased significantly, and the operating performance decreased significantly, and the original planned capital market financing was not completed according to the target. < p > < p > for the debt repayment pressure of M & A loans, Tianqi lithium said that the company had formally submitted an application to the syndicate to adjust the term structure of the loan, but as of September 30, it was still under examination and approval. < p > < p > in terms of thoroughly resolving the company’s risks, Tianqi lithium said that Tianqi lithium, Tianqi group and the actual controller of Tianqi lithium, Jiang Weiping, had been committed to introducing strong and synergistic strategic investors for strategic restructuring. At present, they were stepping up negotiations with potential strategic investors, but as of September 30, no legally binding agreement had been signed Negotiation or contract. < p > < p > times weekly noted that Tianqi lithium said in response to investors’ questions on the interactive platform on October 23 that although a legally binding agreement on the introduction of strategic investors has not yet been signed, relevant work has been continuously and actively promoted. “In the future, if any relevant information touches the company’s information disclosure business, the company will make timely announcement in strict accordance with the provisions and requirements of relevant laws and regulations.” < p > < p > on the same day of the three quarterly reports, Tianqi lithium issued a pre disclosure announcement on the reduction plan of the company’s directors and senior managers. Zou Jun, director and chief financial officer of the company, and Li Bo, Secretary of the board of directors and senior vice president (executive vice president), plan to reduce the total shares of the company by centralized bidding in the secondary market within 6 months from the date of the announcement, accounting for 0.03% of the total share capital of the company. According to the announcement, Zou Jun and Li Bo now hold 1.506100 shares of the company, accounting for 0.10% of the company’s total share capital. Among them, Zou Jun now holds 1124900 shares of the company, accounting for 0.08% of the total share capital of the company; Li Bo now holds 381300 shares of the company, accounting for 0.03% of the total share capital of the company. < p > < p > on May 19, 2020, Tianqi lithium issued the “pre disclosure announcement on the reduction of shares held by controlling shareholders”, which announced that Tianqi group, the controlling shareholder of Tianqi lithium, intends to reduce its shareholding by no more than 88.626 million shares through centralized bidding and block trading, accounting for 6% of the total equity of the company, and the reason for the reduction is to repay the stock pledge financing. < p > < p > one month later, Tianqi lithium issued the “pre disclosure announcement on the company’s senior management personnel reduction plan”, saying that GE Wei, the company’s senior manager, planned to reduce the company’s shares by centralized bidding in the secondary market, with a total of no more than 252300 shares, accounting for about 0.0171% of the company’s total share capital. < p > < p > on July 22, 2020, Tianqi lithium issued the announcement on reducing the shareholding ratio of controlling shareholders to 1%, saying that Tianqi group would reduce its holding of 15.26 million shares of the company through block trading from July 7 to 20, 2020, accounting for 1.03% of the total share capital of the company. < / P > < p > Disclaimer: the purpose of this article reprinted by china.com finance and economics is to convey more information and does not represent the views and positions of the website. 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