Vibrant Group Limited Further Acquires RMB 23.4 Million Debt from China Railway Construction Engineering Group

Key Highlights

• Acquisition of Further Debt: New Vibrant (Jiangsu) Supply Chain Management Co., Ltd, a wholly-owned subsidiary of Vibrant Group Limited, has entered into a Second Debt Transfer Agreement to acquire an additional portion of debt owed by Vibrant Pucheng Logistics (Chongqing) Co., Ltd to China Railway Construction Engineering Group Co., Ltd (CRCE).
• Transaction Size: The amount of debt acquired is approximately RMB 23,365,327 (including accrued interest and penalties), for a consideration of RMB 18,000,000.
• Financial Gain: The Group will book a financial gain of approximately RMB 5,365,327 upon completion of the transaction, as the debt is acquired at a discount.
• Security and Enforcement: CRCE has agreed not to enforce its claims against Vibrant Pucheng until 30 June 2026, providing the Group time to realise optimal value from the underlying property.
• Property Value: The underlying asset, a Multi-Modal Logistics Distribution Centre in Chongqing, is independently valued at RMB 407,418,500 as of 30 April 2025.
• Impact on Financials: The transaction will result in higher net tangible assets and earnings per share for the Group.
• Regulatory Classification: The transaction is classified as a “discloseable transaction” under SGX Rule 1010, as the relevant figures exceed 5% but are below 20%.

Detailed Analysis

Background and Terms of the Transaction

This is the second tranche of debt acquired by New Vibrant from CRCE. The first tranche, totalling approximately RMB 37.2 million, was acquired in January 2025 for RMB 30 million. The cumulative sum now acquired by New Vibrant from CRCE amounts to approximately RMB 60.6 million of Vibrant Pucheng’s debts, all secured by a court judgement giving CRCE priority on sales proceeds from the logistics property.

Under the Second Debt Transfer Agreement, New Vibrant will pay RMB 18,000,000 for debt with a face value (including interest and penalties) of RMB 23,365,327 as at 31 December 2025. This acquisition is to be funded by internal resources, with payment due within three working days of agreement signing, or by 31 December 2025 at the latest. Upon completion, New Vibrant will fully assume CRCE’s rights, title, and benefits attached to the debt, including enforcement rights.

CRCE has warranted the legality and validity of the assigned debt, and additionally has agreed not to transfer any further portion of the relevant debt without New Vibrant’s consent. Importantly, CRCE is undertaking to apply to the PRC Court to further suspend enforcement of its claims against Vibrant Pucheng and will not pursue court enforcement before 30 June 2026 without New Vibrant’s consent.

Potentially Price-Sensitive Information for Shareholders

• Immediate Financial Gain: The transaction is expected to deliver a direct gain of RMB 5,365,327 to the Group, as the assigned debt is acquired at a significant discount to its nominal value.
• Interest Income: New Vibrant will be entitled to all accrued interest and penalties associated with the assigned debt, calculated from the date of the judgement, which may provide additional recurring income to the Group.
• Protection from Enforcement: The agreement with CRCE not to pursue enforcement against Vibrant Pucheng protects the Group’s interests and provides a window to optimise the realisation of the Chongqing property, which is valued at over RMB 407 million – many times the assigned debt.
• Financial Ratios and Regulatory Implications:
  • The transaction increases the Group’s Net Tangible Assets (NTA) per share from 33.49 cents to 33.64 cents.
  • Earnings per share (EPS) rise from 1.13 cents to 1.27 cents post-transaction, based on pro forma calculations.
  • Relative figures under SGX Rule 1006(b) and (c) are 5.69% and 8.66%, respectively, thus requiring disclosure but not shareholder approval.
• Future Strategic Flexibility: The arrangement gives the Group time and flexibility to consider the optimal realisation of the underlying property without the threat of premature enforcement.
• No Director or Major Shareholder Interest: None of the Company’s directors or controlling shareholders has any direct or indirect interest in this transaction, other than through their shareholdings.

Strategic Rationale and Impact

The Board believes this transaction is in the best interests of the Group. By acquiring the debt at a discount, the Group not only realises an immediate financial gain but also secures future interest income and greater control over the outcome of the underlying logistics asset. The suspension of enforcement actions against Vibrant Pucheng limits legal risks and provides the Group with a valuable window to extract maximum value from the property, which could significantly benefit shareholders if optimally realised.

At this time, the Group has no intention to acquire the remaining portion of the relevant debt but will assess future opportunities as they arise.

Investor Considerations

• This transaction may positively affect Vibrant Group’s share price due to the immediate financial gain, improved profitability metrics, and the strategic flexibility it provides.
• Shareholders should monitor future announcements related to the realisation of the Chongqing property, which could unlock significant value for the Group.
• As with any transaction involving distressed or associated assets, execution risks remain, but the structured agreement with CRCE mitigates some immediate legal and financial threats.

Disclaimer

The above article is for informational purposes only and does not constitute investment advice. Shareholders and potential investors are advised to exercise caution when dealing in the securities of Vibrant Group Limited and to consult their professional advisers if they are in doubt about the actions they should take.

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