Sinolight Corporation’s Project of Issuing Short-Term Financing Bills and Medium Term Notes (2011 to Present)
Basic facts: Sinolight is a central enterprise under the supervision of State-owned Assets Supervision and Administration Commission of the State Council (SASAC). Since 2011, Sinolight began to finance by issuing short-term financing bills and medium term notes in interbank bond market. Till now, seven phases of short-term financing bills and one phase of medium term notes have been issued; the total amount of financing is RMB 3.1 billion. The law firm has participated in the issuance of each phase, provided legal service, issued letter of legal opinions and lawyers work report, making contribution to the legal opinions and lawyers work report of Sinolight.
Lawyers’ remarks:
It is possible to engage in short-term financing, medium term notes and other businesses only by obtaining the membership of Inter-bank Market Dealers Association. So far, there are only less than 200 law firms that have the membership in China; our law firm is one of them. The professional services provided by our law firm to Sinolight for bond issuance means we have reached a new level of legal services for debt financing.
To participate in this work, it does not require us to have the legal capacity, but also require us to be familiar with the relevant accounting knowledge, and even relevant knowledge of and experience in capital operation, thus we can help the customers to enlarge the issuance scale and improve credit rating in an effective and legitimate manner. For example, as a kind of marketable securities, the short-term financing bill is a kind of unsecured, standardized, tradable short-term loan covenant from a legal perspective. As the short-term financing bill belongs to short-term credit financing with the maximum period of one year, the scale of one-time financing is large and the repayment pressure is large, once the situation of enterprise is changed and the enterprise failed to make repayment, the enterprise’s reputation and subsequent financing capacity will be seriously damaged. In view of this, our lawyers suggested that the above mentioned problem shall be solved by two ways: 1. to obtain the long-term loans from bank in advance to replace the mature short-term financing bills; or to apply temporary loan from underwriters for repaying principal and interest; then re-organize the issuance of short-term financing bills and repay the temporary loan with the fund raised; 2. to adopt the method of “applying for balance at one time and distributing in many times” and match the varieties with different maturities; on one hand, it can reduce the one-time amount of repayment at maturity; on the other hand, it can use the fund raised by next issuance to supplement the enterprise’s cash flow, thus easing the debt pressure. Sinolight has accepted our advices to make repayment plan in advance, thus there is no delayed payment.
