The restructuring of Shanshan Group, burdened with over 40 billion yuan in debt, has attracted fierce competition from major players, including Liaoning's wealthiest individual and state-owned enterprises. Who stands a better chance?
Following the departure of the "shipping tycoon," new contenders have emerged in the race to revive the business empire left by Zhejiang tycoon Zheng Yonggang. As of December 5, Ningbo Shanshan Co.,Ltd. (600884.SH) had seen seven consecutive trading days of gains, signaling market optimism despite a subsequent dip.
The surge in stock price coincides with the conclusion of the second round of bankruptcy restructuring recruitment for Shanshan Group. Unlike the first round, which drew interest from private shipping magnate Ren Yuanlin, this round has attracted even more prominent investors.
Fangda Carbon New Material Co.,Ltd. (600516.SH) announced its participation in the restructuring on November 24, followed by Hunan Salt Industry Group, which confirmed its involvement and paid a 50 million yuan deposit. The former is backed by Liaoning's richest man, Fang Wei, whose Fangda Group boasts assets exceeding 400 billion yuan. The latter is a state-owned enterprise with strong industrial synergies with Shanshan.
Despite the tight deadline—submissions are due by December 20—the outcome remains uncertain. Challenges include the complex asset disposal process and low repayment rates for ordinary creditors, which could derail the restructuring.
**Capital Heavyweights Join the Fray** Shanshan Group's restructuring has been tumultuous. After an initial loan interest default in June last year, the company entered restructuring in January. The rapid judicial intervention highlights the urgency to salvage its value.
The first recruitment round attracted over a dozen investors, including Jiangsu New Yangzi Commerce and a consortium led by China National Building Material and BOE. However, the initial restructuring plan was rejected after complaints from a former bidder.
The second round imposed stricter criteria, prioritizing investors with expertise in polarizers or anode materials. Fangda Carbon, with its graphite electrode business, aligns well with Shanshan's lithium battery anode materials. Meanwhile, Hunan Salt Industry Group, with its salt and chemical resources, offers complementary advantages for Shanshan's lithium battery production.
**Why the Rush for a Debt-Laden Company?** Shanshan Group's core asset is its 23.37% stake in Ningbo Shanshan Co.,Ltd., valued at approximately 7 billion yuan based on its 30 billion yuan market cap. The company has shown resilience, with Q3 2024 revenue up 11.48% and net profit soaring 1,121.72%.
Shanshan's dominance in lithium battery anode materials and polarizers—holding 33% global market share in large-size polarizers—positions it well in growing sectors like EVs and consumer electronics. Additional assets include stakes in Huishang Bank, healthcare facilities, and real estate.
**Restructuring Uncertainties** With the December 20 deadline looming, the revised restructuring plan must address creditor concerns. The first draft faced criticism for vague debt resolution strategies and low cash repayment rates (3.6%) for ordinary creditors. Improved terms and credible backers could sway votes.
Fangda Carbon's financial backing is strong, but its own debt load (3.179 trillion yuan as of September 2024) raises questions. Hunan Salt Industry, with state backing, may partner with asset management firms to bolster credibility.
The stakes are high—failure could force liquidation, a scenario all parties aim to avoid.
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