ST Longda has secured CNY 363 million (USD 50.56 million) in state-backed financing from Laiyang Hengji to redeem its maturing convertible bonds, removing the immediate default risk. The funding is linked to the company’s restructuring, in which Laiyang Hengji is expected to gain greater influence over investor selection and financial terms. Meanwhile, ST Longda expects its first-half 2026 loss to narrow significantly, supported by a return to profitability in its slaughtering business.
Shandong Longda Meishi Co., Ltd. (ST Longda) has secured state-backed funding to redeem its maturing convertible bonds, removing a major risk that the company would be unable to repay principal and interest on time.
ST Longda announced on July 15 that it had signed a Debt Repayment on Behalf and Creditor’s Rights Confirmation Agreement with Laiyang Hengji Engineering Co., Ltd. Under the agreement, Laiyang Hengji will provide a CNY 363 million (USD 50.56 million) loan earmarked exclusively for the redemption of the Longda Convertible Bonds.
Loan covers outstanding bonds
ST Longda issued 9.5 million convertible bonds in total. By their July 12 maturity date, about 3.15 million had not been converted into shares.Based on the maturity redemption price of CNY 115.00 (USD 16.02) per bond, the company required approximately CNY 363 million (USD 50.56 million) to complete the repayment.
The funding therefore removes the previously identified risk that ST Longda would be unable to redeem the bonds on schedule. The company subsequently said it would distribute the redemption funds on July 17, the final day of the agreed five-trading-day payment period following maturity.
Corporate registration records show that Laiyang Hengji is a state-owned enterprise based in Laiyang, Yantai, Shandong province, where ST Longda has its headquarters. Its indirect controlling shareholder is the Laiyang State-Owned Assets Operation Support Center, a public institution under the Laiyang Finance Bureau.
Funding tied to restructuring
Under the agreement, the actual cost of advancing the CNY 363 million (USD 50.56 million) will be treated as a joint preliminary contribution by all investors participating in ST Longda’s restructuring.
The final restructuring investors, including industrial and financial investors, will bear the full amount advanced in proportion to the restructuring shares they eventually subscribe for or receive, or according to another ratio agreed at the time.
Should the restructuring fail to begin or ultimately prove unsuccessful, ST Longda must unconditionally repay Laiyang Hengji the full CNY 363 million (USD 50.56 million) principal, together with financing costs calculated at the 1-year Loan Prime Rate (LPR).
The arrangement is also set to give the local government a stronger voice in the restructuring. When assisting the court, provisional administrator or administrator, and regulatory authorities in selecting the final industrial investor, the parties will promote Laiyang Hengji’s assessment as a principal reference.
They also agreed to recommend to the court and the provisional administrator or administrator investors with a strong industrial background and the ability to gain recognition from the court, regulators, and creditors as the industrial investor.
According to Laiyang’s official media, an executive team from Sichuan Dekon Holding Group visited the city in June to examine agricultural-industry cooperation projects. Market speculation has since suggested that Dekon could become ST Longda’s industrial investor. ST Longda’s current controlling shareholder, Lanrun Group, is also based in Sichuan.
The agreement offers Laiyang Hengji an additional advantage should it, or a designated entity, subscribe for a financial-investor stake in the restructuring. Its subscription would not be subject to the market-based pricing applied to other financial investors.
Instead, the terms would be negotiated separately by the two parties, which would jointly request the provisional administrator or administrator to make coordinated arrangements. Those terms must be more favourable than those offered to other market-based financial investors.
Slaughtering business returns to profit
ST Longda’s latest forecast for the first half of 2026 points to a loss of CNY 85 million–109 million (USD 11.84 million–15.18 million). That would represent a substantial improvement from the CNY 263 million (USD 36.63 million) loss recorded in the same period a year earlier.
The company said the hog cycle caused operating losses in its pig-farming segment to increase year on year. Its slaughtering business, however, sharply reduced its losses after the company disposed of and absorbed historically accumulated problem inventories last year.
With that legacy burden cleared, ST Longda said its slaughtering operations returned to profitability during the first half of 2026.
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