Guangfeng Technology (688007.SH): Optimizing subsidiary asset structure through debt-to-equity swaps

Zhitong Finance App News. On the evening of November 6, Guangfeng Technology (688007.SH) disclosed an announcement stating that it plans to convert the stock claims of the holding subsidiary Chongqing Fengmi into shares. After the transaction is completed, the registered capital of Chongqing Fengmi will increase from 70,1754 million yuan to 28.7018 million yuan, and Guangfeng Technology's shareholding ratio will increase to 66.05%.

This debt-to-equity swap did not involve additional cash contributions; it involved stock claims already formed in the daily business transactions between the two parties. The claim was reflected in the company's financial statements before this share transfer. After the share transfer was completed, the company's claims for Chongqing Fengmi were reduced accordingly, and long-term equity investment increased accordingly. There was no cash outflow at the consolidated statement level.

At the same time, the announcement emphasized that there is no collateral, pledge or other third party rights relating to the relevant claims, and there are no major disputes, litigation or arbitration matters involving the claims, or judicial measures such as seizure or freezing.

Guangfeng Technology believes that this capital increase through debt-for-equity swaps will help optimize Chongqing Fengmi's balance and liability structure, reduce debt repayment pressure, and ensure the stable operation of Chongqing Fengmi's business. It is in line with Guangfeng Technology's long-term development goals and shareholders' interests, and will not adversely affect the normal operation of the company. After the implementation of this capital increase, Chongqing Fengmi is still the company's controlling subsidiary. There has been no change in the scope of the company's consolidated statements. It does not constitute a major asset restructuring, will not have a significant impact on the company's financial status and operating results, and has not harmed the legitimate rights and interests of the company and other shareholders.

Regarding the “debt-for-equity swaps” method, third-party research institutes generally believe that the solution is the “historical burden” problem: turning rigid debts formed in an enterprise's past cycle into flexible equity that matches the enterprise's return cycle. After the share transfer, the pressure on subsidiaries to repay debts decreased, and the pressure on recovering accounts receivable from listed companies decreased accordingly. Essentially, it is a structural arrangement where the company actively manages existing claims and exchanges time for space.