Analysis | Next Media Finance "Dangers and Opportunities" Li Zhiying's assets are frozen

Political situation

Written by: Sha Banshan

2021-05-15 00:00

Last update date: 2021-05-15 00:00

The Secretary for Security today (14) froze Li Zhiying’s assets in accordance with the implementation rules of the "Docklands National Security Law", including Li Zhiying’s shares in Next Media (0282) and three private companies held by Li.

Regarding this operation, the outside world is concerned about whether it will affect the operation of Next Media, whether the freezing of assets will cause banks to collect debts, and whether the company will be closed as a result.

Based on the analysis of existing data, freezing Li Zhiying's holdings will definitely make him unable to sell goods for cash, but it will not have much impact on Next Media's operations for the time being.

However, people in the financial industry warned that once bank debt collection (Call Loan) occurs, it may bring an avalanche of consequences!

Li Zhiying holds a market value of 349 million shares of Next Media and cannot be traded during the freezing period

According to information disclosed by the Hong Kong Stock Exchange, as of today (May 14), Li Zhiying holds 71.26% of Next Media's shares. Based on today's closing price of 0.186 yuan, the amount involved is about 349 million yuan.

According to the Hong Kong Stock Exchange, the market value of Next Media is about 490 million yuan.

The market’s first concern is of course whether Next Media’s shares will be affected.

Generally speaking, if major shareholders and employees of a listed company are involved in criminal cases, it is necessary for the company to maintain an orderly market according to the "Listing Rules". At this time, the company will take the initiative to apply for suspension of trading until a notice is issued for clarification.

This time the Security Bureau announced after the market close on Friday that Next Media can issue relevant announcements on weekends.

As Li Zhiying’s shares have been frozen, even if Next Media’s shares can continue to be traded, Li Zhiying cannot transfer his shares.

No bank account involved in Next Media has no impact on daily fund transactions

As for whether it will affect the operation of Next Media, since the bank account of Next Media is not involved this time, the daily income and expenditure such as paying grain and receiving advertising fees will not be affected.

Zhang Jianhong, Chief Executive Officer of Next Media, also pointed out that the incident has nothing to do with Next Media Group, and the operation and financial finance of the Group and Apple Daily will not be affected.

As for the three private companies of Li Zhiying whose bank accounts have been frozen, if they are involved in business dealings with Next Media, these businesses may be affected.

Because after the account is frozen, the three companies will not be able to have commercial capital exchanges, and they will not be able to provide food to their employees, and will be in a state of suspension. If the business contacts of OneMedia are involved, it will affect the use of NextMedia's services.

This aspect needs to be clarified by Next Media.

Bank loans are settled in Taiwan Dollars due to mortgage of Taiwan property loans

Next Media is often accused of high debt. Based on its latest interim results, as of September 30, 2020, Next Media’s bank loan was 260 million yuan, of which about 168 million yuan will mature within one year, with a debt-to-asset ratio of approximately 35.1%.

The bank loan of Next Media was originally settled in New Taiwan Dollars.

There are 4 bank loans of NextMedia, all of which are based on Taiwan's financial industry or bank standards.

The reason is that Next Media pledged Taiwanese properties with a book value of HK$375 million to a number of Taiwan banks in exchange for bank financing. Therefore, the above bank loan is believed to not involve Hong Kong business.

In the past, in many listed companies, if major shareholders "betted" against banks or securities companies, they would show changes in their short positions in the Disclosure of Interests (SDI). However, judging from the current disclosure of rights and interests, Li Zhiying has no such issue. The signs are relatively "clean" compared to some companies that play complex financial skills.

Some people in the financial industry analyzed that the major shareholders pledged to banks and securities firms, and there is no need to declare their rights and interests. If a name change is involved, they need to be disclosed.

He believes that based on the current information, Li Zhiying may not have debt problems, but reminds banks that loans to companies usually have multiple terms, some of which are very strict. For example, there was a bank loan that required a major shareholder to be the chairman of the company. If any change touches the loan terms, the bank can ask for immediate repayment at any time.

He said that one of the follow-up focuses is to look at the bank's response. Once there is a bank "Call Loan", it may trigger a chain effect, and other banks will follow up at any time.

Taiwan's "Apple Daily" paper newspaper will cease publication.

(Photo by Hong Kong 01 reporter)

"Taiwan Apple Daily" suspension of paper publication helps save costs

Coincidentally, before the announcement of the freezing of assets, Next Media announced that it would stop publishing the paper newspaper "Taiwan Apple Daily" starting next Tuesday (18th), and will focus on network business in the future.

According to the latest interim results, the average daily circulation of "Taiwan Apple Daily" is nearly 83,000 copies, which is a drop from nearly 102,000 copies in the first half of 2019. Revenue plummeted by 38% to 73.2 million yuan, of which advertising revenue fell even more. 51.4%.

Next Media stated that after the suspension of publication, "Taiwan Apple Daily" will "carry out a certain degree of layoffs", which is a cost-saving "stop-loss" measure for the company.

Although the Taiwan business accounts for only 18% of the total revenue, business adjustments can bring about a cost-saving effect. For bank loans, this part of the business change is not a negative impact.

The Security Bureau quotes the National Security Act to freeze the shares of Li Zhiying One Media and the properties in the bank accounts of three companies

Security Bureau freezes Li Zhiying's shares in One Media Zhang Jianhong: Apple Daily and group operations will not be affected

First cited the National Security Law to freeze property security directors with reasonable suspicion to freeze the crimes and profits without any time

01News

Next Media Apple Daily Li Zhiying Hong Kong Edition National Security Law