Shanxi Tond Chemical Co Ltd

ST Tongde (002360.SZ) disclosed in an announcement on 7 October that as of 29 September, the company and its wholly owned subsidiary Tongde Sci-Tech had total overdue debt principal and interest of 829 million yuan, including overdue principal of 778 million yuan and interest of 51.5628 million yuan, with the overdue principal accounting for 85.62% of audited net assets at the end of 2025. A company source told China Business Journal that the company has now entered a critical stage of pre-reorganisation, relevant agreements have been signed, all application materials have been completed and submitted, and the matter is currently in the court's initial review process. The overdue debt began with a first default of 30.8209 million yuan in principal in April 2025, the first interest arrears appeared at the end of May 2025, overdue principal exceeded 300 million yuan at the end of November, and since 2026 multiple banks, financial leasing firms and other financial creditors have successively initiated litigation and asset preservation procedures. In April 2026, a creditor applied for pre-reorganisation on the grounds that the company was unable to repay maturing debts but its core civil explosives assets had reorganisation value. The Intermediate People's Court of Xinzhou, Shanxi Province accepted the pre-reorganisation filing and registration in accordance with the law and publicly recruited reorganisation investors. In July 2026, the court ruled to extend the pre-reorganisation period to 20 October. The company said current production and operating order is generally normal, with no work stoppages or production halts, and it plans to adjust assets, liabilities, personnel structure, share capital and business through judicial reorganisation.

ST Tongde released its 2026 interim report, with net profit attributable to the parent company at negative 48.47 million yuan, swinging from profit to loss. Total operating revenue was 184 million yuan, down 28.00% year-on-year. Net cash inflow from operating activities was 61.02 million yuan, down 1.33% year-on-year. The company's latest asset-liability ratio was 74.60%, gross margin was 44.66%, ROE was negative 5.48%, and diluted earnings per share was negative 0.12 yuan.

ST Tongde's wholly-owned subsidiary Tongde Sci-Tech Materials has been taken to arbitration by Shaanxi Chemical Construction Engineering over a construction contract dispute, with the total amount involved reaching RMB 55.1 million. The claimant is seeking payment of RMB 52.86 million for completed work and RMB 2.24 million in overdue interest, and is asserting a priority right to be paid from the discounted or auction proceeds of the project in question. The arbitration stems from Tongde Sci-Tech's PBAT new materials integrated industrial chain project, where the respondent's cash flow difficulties led to multiple work stoppages. The claimant has not resumed work since halting on December 20, 2024, and has notified the termination of the contract. Last year, ST Tongde reported a net loss attributable to shareholders of the listed company of RMB 1.093 billion, and it expects to continue posting a loss of RMB 38 million to RMB 55 million in the first half of this year.

ST Tongde disclosed an update on its overdue debts. As of July 30, 2026, the company and its subsidiaries had overdue principal on debts with financial institutions amounting to 703 million yuan, with overdue unpaid interest of 29.5425 million yuan, for a total of 733 million yuan. The overdue principal accounts for 77.41 percent of the company's audited net assets at the end of 2025. Since the first disclosure of 30.82 million yuan in April 2025, the scale of overdue debts has grown more than 21 times in 15 months. The company posted a massive loss of 1.093 billion yuan in 2025, mainly due to setbacks in the PBAT new materials project led by the actual controller, with impairment losses on construction in progress alone reaching 915 million yuan. As of the end of March 2026, the company had only 76.5049 million yuan in cash on hand, a debt-to-asset ratio of 73.73 percent, and a current ratio of 0.32, indicating immense short-term debt repayment pressure.

ST Tongde's four patent assets have been frozen or subject to property preservation by the China National Intellectual Property Administration due to a debt dispute with Tianan Tiandi Pawnshop. The freeze period runs from July 15, 2026 to July 15, 2027. The company stated that the frozen assets remain in its custody and use, and production and operations are proceeding normally. However, if the court takes further measures, there is a risk of judicial disposal. Previously, the company's pre-reorganization period was just extended by the Xinzhou Intermediate People's Court to October 20, 2026. In the first half of 2026, the company expects a net loss attributable to the parent company of 38 million to 55 million yuan, swinging from profit to loss year-on-year, with a decline of 442.59% to 595.86%.