Shandong Chenming Paper (01812): Partial debt overdue and partial bank accounts frozen.

Shandong Chenming Paper (01812) announced that in recent years, the paper industry has seen a concentration of new production capacity, leading to a prominent short-term supply-demand imbalance. The prices of the company's main paper products, especially white cardboard paper, have significantly declined due to the supply-demand imbalance, resulting in the company's profit level continuously decreasing and turning into losses. Additionally, some financial institutions have reduced their loan sizes, causing temporary liquidity constraints for the company. As a result, the company and some of its subsidiaries have temporarily faced difficulties in repaying debts on time, leading to lawsuits from creditors who have applied for asset preservation through the court. The court has ordered the freezing of some of the company's and its subsidiaries' bank accounts. As of November 18, 2024, the company and its subsidiaries have accumulated overdue debts totaling RMB 1.82 billion, accounting for 10.91% of the company's most recently audited net assets. The company has provided joint and several guarantees for its subsidiaries' related financing, with the corresponding overdue amount totaling RMB 574 million, approximately 3.44% of the company's most recent audited net assets. As of November 18, 2024, the number of frozen bank accounts for the company and its subsidiaries is 65, accounting for 8.47% of the total number of bank accounts. The total frozen amount in these accounts is RMB 64.837 million, representing 0.39% of the company's most recently audited net assets. Among these, 51 accounts have been frozen due to reasons such as overdue promissory notes and debt disputes. Due to some overdue debts and guarantees, the company and its subsidiaries may incur corresponding default penalties, late fees, and interest charges, which could increase the company's financial expenses, affect its financing capabilities, and worsen its cash flow situation. Failure to address these issues promptly could result in legal actions, arbitration, frozen bank accounts or assets, posing risks to the company's financial condition, daily operations, and annual performance. Since the third quarter, the prices of the company's main products, especially white cardboard paper, have continued to decline, leading to severe operating losses. Combined with the reduction in loan sizes by some financial institutions, the company is facing liquidity constraints. To reduce losses, the company has implemented production restrictions and shutdowns at some production bases since November. As of the announcement date, the company has temporarily shut down production lines at its Shouguang base, Zhanjiang base, Jiangxi base, and Jilin base, reducing pulp and paper production capacity by 7.03 million tons, accounting for 71.7% of total production capacity. This has affected monthly pulp and paper production volume by approximately 580,000 tons and paper sales volume by around 350,000 tons. The company is actively seeking working capital and striving to resume operations. The frozen bank account balance accounts for only 0.39% of the company's most recently audited net assets, a relatively low proportion, and not the main bank account of the company. The company is actively communicating and negotiating with relevant creditors and the court to resolve the issue of frozen bank accounts as soon as possible. Currently, the company is exploring various financing channels to raise funds for debt repayment and actively engaging with creditors to negotiate extension and repayment plan adjustments. Additionally, the company will take effective measures to ensure production and operation, increase efforts in disposing of non-core assets, and strive to improve the company's operating situation.