Dior Water Huachua: intends to accept real estate from 19 property developers including Longfor and Vanke in exchange for debt, offsetting accounts receivable of 155 million yuan

On March 20, Dico Water Huahua (002798.SZ) announced that the company plans to accept non-cash assets from 19 real estate companies, including Longfor Group (00960.HK), Vanke (000002.SZ), Country Garden (02007.HK), China Jinmao (00817.HK), and Chengdu New Hope Real Estate Co., Ltd., to settle debts.

A more straightforward way to say this is “debt settlement with property.” The announcement states that the debtor will use their completed and under-construction commercial properties (including residential, retail, apartments, and parking spaces) totaling 161 million yuan (including VAT) to offset their payable amount of 155 million yuan to the company. The remaining 6.0649 million yuan will be paid in cash by the company.

There are two methods of execution: First, the company and the debtor will sign a written agreement to register the relevant properties online for the purpose of debt offset, and the company will hire an asset appraisal firm to evaluate the properties involved in the debt settlement. Second, the company and the debtor will sign a written agreement, whereby the debtor will sell the properties within an agreed timeframe, and the proceeds from the sale will be used to repay the company’s debt.

The announcement states that all debtors involved in this non-cash asset debt settlement are clients and related parties of the company’s building ceramics and sanitary ware business. None of the debtors are related to the company, its directors, senior management, shareholders holding over 5%, or their related parties. There are no benefits transferred to the company or its related parties. Currently, the company has recorded some of the assets involved in the debt settlement based on the assessed value from online registration or market price standards.

Dico Water Huahua has engaged an asset appraisal firm to evaluate the properties involved in the online registration and proposed registration for debt settlement. The appraisal results show that the properties used for debt settlement (both registered and proposed) had an assessed value of 64.5475 million yuan as of January 31, 2026 (the appraisal date).

The announcement points out that this assessed value differs from the debt amount of 94.5158 million yuan. “After careful consideration, the company believes that making appropriate concessions on asset settlement and using property to settle debts is the optimal way to mitigate accounts receivable recovery risks, ensuring asset security and maximizing the interests of the company and all shareholders.”

The announcement indicates that this matter has been approved by the board of directors. The company has previously conducted multiple non-cash asset debt settlements, with a total amount of approximately 783 million yuan from May 2024 to April 2025. These matters were approved at the 2024 annual shareholders’ meeting.