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China's Tsinghua Unigroup completes debt restructuring, ownership change to keep afloat its major semiconductor operations

Tsinghua Unigroup, the former high-flying technology conglomerate affiliated with China's top university, has completed its year-long debt-restructuring process, ending the company's high-stakes battle to keep afloat some of the nation's major semiconductor operations.

Beijing-based Unigroup said it has entered a "new phase" after concluding the business registration of its new equity owner, directors, supervisors and general manager, according to the company's statement on Monday.

New owner Beijing Zhiguangxin Holding - formed last year by lead investor Wise Road Capital and its sister fund Beijing Jianguang Asset Management Co, known as JAC Capital - has fully taken over Unigroup's equity from Tsinghua Holdings and Beijing Jiankun Investment Group.

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Li Bin, a former executive at Chinese contract chip maker Semiconductor Manufacturing International Corp, serves as legal representative of the holding company, which counts several provincial state-owned funds as investors.

Tsinghua Unigroup's headquarters in Beijing. Photo: Handout alt=Tsinghua Unigroup's headquarters in Beijing. Photo: Handout>

Zhiguangxin's biggest shareholder, with a 29 per cent stake in the company, is state-owned fund Wuhu Xinhou Yunzhi Equity Investment Partnership from eastern Anhui province. Wuhu Xinhou is an entity controlled by Li, Zhiguangxin's legal representative, according to business registry records.

Creditors of Unigroup will start to receive cash payments as early as Wednesday, according to the company's statement. The firm indicated that creditors will be paid between 95 per cent to 100 per cent of what they are owed.

That repayment plan, which involves a cash outlay of 60 billion yuan (US$8.94 billion) and various debt-to-equity swaps, was drawn up by the Wise Road Capital-led consortium of investors in mid-December and approved by all stakeholders later that month, according to Unigroup's statement. In January, the Beijing First Intermediate Court terminated the company's debt overhaul process to kick off a six-month execution phase.

Unigroup, known for its unsuccessful US$23 billion bid for US chip maker Micron Technology in 2015, had been saddled with more than 200 billion yuan in total liabilities after years of aggressive expansion into areas beyond chips, including finance, energy and education. The firm entered a court-ordered bankruptcy restructuring in July last year.

People check out semiconductors on display at the Tsinghua Unigroup booth during the China Beijing International Hi-Tech Expo in Beijing on September 19, 2020. Photo: AP alt=People check out semiconductors on display at the Tsinghua Unigroup booth during the China Beijing International Hi-Tech Expo in Beijing on September 19, 2020. Photo: AP>

The company's new lease on life has prevented the collapse of a large hi-tech enterprise with businesses that form part of China's semiconductor supply chain.

Unigroup's portfolio of assets includes shareholdings in semiconductor design firm Unisoc and the country's top memory chip maker, Yangtze Memory Technology Co.

The firm's debt crisis exploded in 2020, when it was plagued by diminishing cash flows and faced pressure to pay off maturing debts in both onshore and offshore markets. Entering bankruptcy proceedings last year represented a big fall for Unigroup, which was once seen as a major player in Beijing's push for semiconductor self-reliance amid the escalating US-China tech war.

Unigroup investor Wise Road Capital, meanwhile, has raised eyebrows in the semiconductor industry for its acquisitions in Asia and Europe. In some cases, it relocated the assets of acquired firms to the mainland. The Chinese private equity fund manager in December terminated its US$1.4 billion deal to buy South Korea's Magnachip Semiconductor Corp, which was blocked by Washington's Committee on Foreign Investments in the United States over national security concerns.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.