The Liquidity Crisis Caused A Number Of Companies In Shandong To Fall Into A Halt.

Shandong's Ruyi science and Technology Group Limited (hereinafter referred to as "Shandong Ruyi") is now in a vicious circle under the pressure of debt. Liquidity is causing more and more thorny problems. Affected by the impact of the new crown epidemic, Israeli clothing manufacturer Bagir is seeking external capital injection, and is also making legal advice on options including bankruptcy.

It is understood that Bagir has been a willing takeover target in Shandong, but it has indicated that it will sue Shandong for its good intentions because it has not paid the outstanding amount of $10 million. In addition to Bagir, foreign media reported that the acquisition cost of Shandong's luxury brand BALLY, which is willing to pay $600 million, has not yet been paid.

In a recently published legal document, reporters found that many companies in today's Ruyi department are facing a state of wage arrears, capital turnover or even half stop production.

In May 8th, a reporter interviewed Ruyi group on the above issues. The director of the company's secretaries said: "our production and operation are all normal." In addition, he also said that the legal document mentioned by reporters was not known.

The takeover target will go bankrupt.

Shandong Ruyi delinquent tens of millions of dollars in acquisition

Bagir is an Israeli men's wear manufacturer founded in 1961. The United States and Britain are the two largest consumer markets in the world, and their shares are listed on the London Stock Exchange.

In April 3rd, a notice issued by Bagir said that due to the impact of the new crown epidemic, British and American customers in the two most important sales markets of the company were hit hard, and orders were cancelled. This causes the company to lack sufficient cash to ensure the operation of the business. At the same time, the company said it had applied to the Israeli district court to assess the possibility of continuous operation of the group business and the best way to cash in.

The latest announcement issued by Bagir in April 22nd indicated that the Israeli local court had accepted the application submitted by the company and authorized the client to assess the possibility of the company's continuing operation. Due to the unstable financial situation, Bagir stock has applied for suspension.

The court is expected to hold a hearing at 10 a.m. (Israeli time) on May 12, 2020 to assess and agree on the next steps that should be taken by the company. This also means that the old Israeli clothing enterprise will face bankruptcy in the future.

In November 2017, Shandong Ruyi promised to invest $16 million 500 thousand to buy Bagir 54% shares and become its controlling shareholder. However, after paying $3 million 300 thousand, the remaining $13 million 200 thousand was delayed. The deal, which should have been completed by the end of 2018, was eventually postponed to March 31, 2020.

In addition to the reimbursement of the purchase, Shandong Ruyi also has to provide the western Bagir factory in Ethiopia with a market value of about 1 million 300 thousand dollars before the end of September 2019.

"We are disappointed to announce that we have decided to take legal action against Shandong Ruyi group, but we have no choice." Bagir CEO Micha Ronen said that as of February 21st, Shandong Ruyi still failed to comply with the agreement, which constituted a major breach of contract.

"In regard to the Bagir group's proposed litigation on acquisition, the Shandong Ruyi group is in friendly consultation with the other party, and has made sure that the acquisition is properly resolved on the basis of ensuring the full protection of the interests of all parties." Shandong Ruyi said in reply to our reporter earlier.

In addition to affecting the acquisition of Bagir group, Shandong Ruyi's liquidity crisis reported that Shandong Ruyi announced in 2018 that it would buy Swiss luxury brand Bally at a price of 600 million US dollars, but the funds were still not in place, and the acquisition still faces a variable.

In addition, Renown, a Japanese clothing company purchased by Shandong Ruyi in 2010 at a price of 310 million yuan, said in March this year that Renown had failed to recover 5 billion 300 million yen receivables from Shandong Ruyi subsidiary, resulting in a two consecutive financial loss for the company.

The account was blocked and frozen.

A number of companies are in a semi shutdown state.

Shandong's struggling capital is now facing a more severe test under the impact of the epidemic.

A few days ago, the first quarterly report released by Ruyi group of Ruyi listed company in Shandong showed that the company achieved operating income of 159 million yuan, down 40.03% from the same period last year, and the net profit attributable to shareholders of listed companies was 7 million 810 thousand yuan, down 22.78% compared to the same period last year. If the deductible fee is recurring, the net profit of the company will be 10 million 270 thousand yuan, down 237.67% from the same period last year. In 2020,

"The reason is that the reporting period is affected by the epidemic situation at home and abroad, and sales volume decreases and business income decreases." Ruyi group explained in a quarterly report.

"Short term domestic and international epidemic situation, downstream brand clothing and upstream textile manufacturing companies are facing pressure." According to a research report of Everbright Securities, although the domestic epidemic prevention and control has achieved initial success, the epidemic situation abroad has not been significantly curbed, and overseas demand and the export of textile and clothing products are still being affected.

In addition to the first quarter, Ruyi group's annual performance was also not optimistic last year. Ruyi group's main business performance for the year shows that the company achieved operating income of 1 billion 150 million yuan in 2019, down 13.39% compared with the same period last year. The net profit attributable to shareholders of listed companies was 48 million 160 thousand yuan, a sharp decrease of 51.35% compared with the same period last year. If the non recurring gains and losses were deducted, its net profit was only 16 million 280 thousand yuan, and the decline was more than 66.43%.

Due to tight funds, Ruyi group has been accused of many times, and a legal document disclosed in March 12th shows the current predicament of the Department.

Owing to a contract dispute with the reed international business factoring company (hereinafter referred to as "Reed Wo International"), the reed international filed a pre litigation preservation, freezing the bank deposits of 13 million 11 thousand and 300 companies in Shandong Ruyi, Ruyi group and Shandong Jining Ruyi import and export three yuan.

"Due to the closure of the hospital, the dissenters' funds have been in a state of tension, and the capital turnover has not yet been followed, resulting in the arrears of wages, the production materials can not be purchased, and the company's normal business has been seriously affected. The three companies mentioned in the application for freezing objection to the court.

"Our production and operation are all normal." 8, in an interview with reporters, Ruyi group, deputy director of the office of a staff member said, however, he said that the legal documents mentioned by reporters did not know, "during the epidemic period were isolated at home, just returned from the field, so it is not very clear."