Zhonghua Geotechnical secures $1.2 bn in bank loans with shareholder backing

China Zhonghua Geotechnical Engineering Group Co., Ltd. (Zhonghua Geotechnical) has announced progress in its connected transactions, securing bank loans through guarantees provided by its controlling shareholder, Chengdu Xingcheng Investment Group Co., Ltd. (Chengdu Xingcheng Group). Following board and shareholder approval, Chengdu Xingcheng Group provided a total guarantee of RMB 500 million from China Construction Bank, RMB 400 million from Bank of China, and RMB 300 million from Huaxia Bank, totaling RMB 1.2 billion. Zhonghua Geotechnical has also provided counter-guarantees through equity pledges and other assets.

These guarantees fall under a previously approved total guarantee limit of RMB 2 billion with a three-year validity. Chengdu Xingcheng Group holds a 29.27% stake in Zhonghua Geotechnical. For the portion of the guarantee exceeding its shareholding (70.73%), Zhonghua Geotechnical will pay a guarantee fee of up to 1.0% per annum, reflecting market-based principles. This arrangement is deemed to meet the company’s operational and development needs.

As of the disclosure date, Zhonghua Geotechnical and its subsidiaries have an outstanding external guarantee balance of RMB 347.5571 million, representing 42.52% of its last audited net assets of RMB 817.3612 million. There are no overdue guarantees, guarantees involved in litigation, or losses from judgment-defeated guarantees.