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Xinyuan Real Estate Co., Ltd. Message Board

  • brianchesnutt brianchesnutt Apr 25, 2014 3:52 PM Flag

    20F Tidbits

    Extensive document, so I'd like to read anything short that anyone sees that may be of interest. If no one else posts, you may be reading a lot from me!

    #1 Following a Change of Control or a Fundamental Transaction, the Company must make an offer to purchase all outstanding Convertible Note at a
    purchase price equal to 150% of the principal amount thereof plus accrued and unpaid interest to the payment date.

    Basically... XIN is not going to get bought out by anyone but TPG... Pretty smart to throw that in there.

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    • #10. In November 2011, we entered into a business development advisory services agreement with Karmen Equities Limited, of which Omer Ozden (“Mr. Ozden”), one of our directors at the time, is a minority shareholder. The term of this agreement was six months with advisory fees based on an hourly rate; the agreement was to be automatically renewed for an additional six month period upon expiration on a continuous basis. On September 19, 2013, Mr. Ozden resigned from our board of directors and the advisory services agreement was terminated at that time. During the year ended December 31, 2013, we paid Mr. Ozden and Karmen Equities Limited US$112,426 in the aggregate under this agreement. No balance was due under this agreement as of December 31, 2013.

    • #9. Prior to 2013, we entered into a series of consulting agreements with a consulting company that is beneficially owned by Yong Cui (“Dr. Cui”), one of our directors. Under the agreements, we should to pay an annual fee of US$ 600,000 since 2012. On July 1, 2013, we entered into an employment agreement with Dr. Cui to employ him as our President from July 1, 2013 to June 30, 2016. Pursuant to the employment agreement, all the consulting agreements with Dr. Cui and his related company executed before July 1, 2013 was terminated. As of December 31, 2013, there were no balances due to Dr. Cui relating to the aforementioned terminated consulting agreements

    • #8. For the fiscal year ended December 31, 2013, the aggregate compensation to our executive officers, including all directors was US$15.1 million, and the aggregate compensation to our non-executive directors was US$0.74 million. As discussed below under “ - D. Employees” we made contributions of US$3.5 million to employee benefit plans for the fiscal year ended December 31, 2013.

    • #7. We paid US$0.04 million, US$0.3 million and US$0.4 million to satisfy guarantee obligations related to customer defaults for the years ended December 2011, 2012 and 2013, respectively. The fair value of the guarantees is not significant and we consider that in case of default in payments, the net realizable value of the related properties can cover the repayment of the outstanding mortgage principal together with the accrued interest and penalty and therefore, no provision has been made for the guarantees in our consolidated financial statements.

    • #6 We have two share-based compensation plans, our 2007 equity incentive plan and our 2007 long-term incentive plan. Under our 2007 equity incentive plan, we granted share option awards for an aggregate of 6,802,495 common shares at a weighted average exercise price of US$1.08 on August 11, 2007. Under our 2007 long-term incentive plan, we may grant options, restricted shares, restricted stock units, stock appreciation rights and other stock-based awards for the purchase of up to 10,000,000 common shares. As of December 31, 2013, we have granted options and restricted stock awards to acquire up to 13,189,604 common shares. We charged compensation cost of US$1.7 million, US$2.2 million and US$0.7 million as of December 31, 2011, December 31, 2012 and December 31, 2013 in the general and administrative expenses. For a description of the grants under each of the plans, see Note 15 of the consolidated financial statements included elsewhere in this annual report.

    • #5... Obviously this is old, but I did not know this:

      The Property Law of the PRC, or the Property Law, promulgated on March 16, 2007 and effective as of October 1, 2007, further clarified land use rights in the PRC with the following rules:
      · the land use rights for residences will be automatically renewed upon expiry;

    • #4. This one is interesting... Don't know that it's been a big problem so far, but interesting nevertheless:

      Under our compensation committee charter, only 50% of members of the committee at any time (less than a majority) must be independent ofmanagement, while a US domestic issuer is required to form a compensation committee composing entirely of independent directors. We are also not required to and do not report compensation of senior management or directors on an individual basis. As a result, investors are not able to access for themselves appropriateness or reasonableness of the amount or form of compensation for individual executives.

    • XIN could get bought by someone besides TPG, the buyer would just have to be willing to pay $9 / ADS on the 12 million ADSs that TPG has warrants.

      I figured a rough estimate of book-value at $12.20 per Share (Assets minus Liabilities divided by the total Share Count).

      Xin bought a corporate jet and the payment on it runs them $1.5 million per quarter ($6 million per year). Surely a company making $125 million per year in net-income can afford a jet......but it kind of bugs me. If they were trading at 150% of book, and had a 40 X's P/E; hey, go for the jet! But, trading at 35% of book, and a 3 X's P/E, they should really put their efforts into buying back stock, raising the dividend, or buying more land instead.

      • 2 Replies to bmayo2727
      • Lol Bmayo! I read this and I was like This guy stole from seeking alpha.... then I realized you are the same person :)

        Jet is fine with me. Fly out the big spenders straight to NYC and sell them a property. $6 mil isn't a huge deal if everything else is working out. Prestige, trying to become a top Real Estate firm, It's pricey, but whatever....what's done is done.

        Book Value should increase this quarter based on regular profits, and the shares they bought back at a steep discount. I don't know if some institution is unloading because of this whole China auditing/accounting debacle, or maybe retail is just getting scared off. It seems like TPG bought in before all that stuff came to the forefront so I sure hope it's not them changing their minds. Anyway, once whoever it is gets done unloading maybe the bleeding will stop.

      • Dang, missed the new private jet expense. It's really expensive and it will affect the bottom line. Wonder if they jumped the shark with this.

    • #2. Per page 31 of the document, or page 35 of the PDF, it mentions the adverse affects that could come if the outcome of the proceedings is negative since ours is one of the 4 accounting firms subject to the 6-month suspension.
      I don't know how this whole thing will pan out. Curious to hear opinions on much of an affect this is having on the share price.

      • 2 Replies to brianchesnutt
      • None, I don't think. As long as they are appealing, they don't do the 6 months. Could delay this for a very long time. On the other hand, since quarterlies don't get audited they might have been better off
        to take the suspension from May, so it wouldn't interfere with year-end auditing. Maybe there's a reason they can't do that?

      • #3 Just thought this one was funny:

        Although we require our contractors to carry insurance, we believe most of our contractors do not comply with this requirement. Our contractors may not be sufficiently insured themselves or have
        the financial ability to absorb any losses that arise with respect to our projects or pay our claims.

        Sentiment: Buy

    • read that as well...but is it a double-edged sword? does the 50% premium apply to TPG's own offer? If so, then $8.75 - $9 would be a minimum for TPG/XIN to take it private.

3.37-0.06(-1.75%)Nov 27 1:03 PMEST