Guangzhou Baiyunshan Pharmaceutical Holdings Company Limited (00874) released an announcement regarding a proposed plan for its non-wholly-owned subsidiary, Guangzhou Pharmaceuticals Company Limited (GP Corp.), to securitize accounts receivable. Under this arrangement, GP Corp. intends to enter into an Underlying Assets Sale and Purchase Agreement with an administrator to sell accounts receivable generated from drug and medical device sales to public hospitals of Grade II or above or to commercial companies. The administrator would establish a “GP Corp. Accounts Receivable Asset-backed Special Scheme” and issue asset-backed securities amounting to no more than RMB3 billion.
According to the announcement, GP Corp. will transfer the initial Underlying Assets—receivables tied to existing drug and medical device sales—as well as additional Underlying Assets acquired on a revolving basis. A combination of special revolving purchase and general revolving purchase schemes will determine the consideration for these receivables. The difference between the face value of the sold receivables and the purchase price will be applied to cover financing costs and related tax expenses, and the total accumulated discount is required to meet interest and expenses for each tranche of the scheme.
Once established, the Special Scheme is expected to raise liquidity for GP Corp. by converting accounts receivable into cash. The proceeds are intended to supplement GP Corp.’s working capital or to repay debts. The plan remains subject to shareholders’ approval, and the company will hold an extraordinary shareholders’ meeting to review the proposal. Further details, including identification of the administrator, will be disclosed in accordance with Hong Kong Exchanges and Clearing Limited’s Listing Rules when confirmed.
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