Greenland Holding Group [600606:CH] announced on September 15 that it has reached a loan agreement with its biggest shareholder, Shanghai Greenland, to borrow RMB500m for a maximum term of one year at an annual interest rate of 6.5%, according to The Paper on the same day. Greenland is responsible for the taxation arising from this loan. On the same day, another announcement by Greenland stated that Shanghai Greenland had pledged 143m shares it holds to Sinolink Securities [600109:CH], or a 4.03% stake of the company, and the funds raised will also support the operation of Greenland.
As a major shareholder owning 29.13% of Greenland’s equity, Shanghai Greenland is actually founded by 1000 of shareholding employees in Greenland through a limited partnership, who has absorbed the original shareholding employees committee in this process. The company has no business activities. Except for this one, Greenland had previously reached another loan agreement with Shanghai Greenland on August 24 to borrow flexible amounts of funds with a hurdle of RMB3.5bn in sum. The frequent financing activities of Greenland can be interpreted as to improve its cash flows as this real estate firm's financial statements of 2019 has raised concern across the market with alarming liquidity circumstances that expose it to the urgent need to guard its circulation of cashflows.