Qinghua with 27 Trillion Won Debt Prepares Restructuring Plan and Submits to Court and Creditors
Potential Investors Show Interest in Zigangqu Fund Holding 46.45% Stake in Qinghua Uni
[Asia Economy Beijing=Special Correspondent Jo Young-shin] Tsinghua Unigroup, which entered the semiconductor market under the banner of China's 'semiconductor rise,' is undergoing bankruptcy restructuring procedures as it cannot handle its debt amounting to 27 trillion won.
According to Chinese economic media Caixin on the 19th, the Beijing Intermediate People's Court accepted the bankruptcy restructuring application filed by creditor Huishang Bank against Tsinghua Unigroup.
Bankruptcy restructuring is similar to South Korea's corporate rehabilitation process, which allows companies with sustainable value to survive by reducing part of their debt or converting debt into equity.
The Chinese People's Court appointed the current management of Tsinghua Unigroup as the administrator responsible for the bankruptcy restructuring process.
China's Enterprise Bankruptcy Law stipulates that the administrator must prepare a restructuring plan within six months from the court's acceptance of the bankruptcy restructuring application and submit it to the court and creditors. The deadline can be extended by up to three months for justifiable reasons. If the administrator fails to submit the restructuring plan within the deadline, the court will declare the debtor bankrupt.
Caixin cited experts saying that Tsinghua Unigroup had already been negotiating with potential investors before the bankruptcy restructuring decision, with interest shown by the Zhejiang State-owned Assets Supervision and Administration Commission (SASAC), Hangzhou SASAC, and Alibaba Group.
However, Caixin reported that while the institutions expressing investment intentions are particularly interested in Tsinghua Unigroup's 46.45% stake in the listed company Ziguang Guofen, Tsinghua Unigroup hopes to attract strategic investment at the group level rather than selling individual companies, indicating a difference in views between the two sides. Ziguang Guofen controls Xinhua San Group, which competes with Huawei in business areas such as servers, PCs, shared cloud, and routers.
Caixin analyzed, "The reason Tsinghua Unigroup has faced difficulties is that over the past decade, it engaged in massive overseas mergers and acquisitions and burned through money in several semiconductor businesses under its umbrella but lacked the ability to generate its own cash flow."
As of the end of June last year, Tsinghua Unigroup's debt amounted to 156.7 billion yuan (approximately 27 trillion won), more than half of which was due within one year.
Tsinghua Unigroup is a semiconductor design and manufacturing company with a 51% stake held by the prestigious Tsinghua University, alma mater of President Xi Jinping, and along with foundry company SMIC, it is one of China's representative semiconductor companies.
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