Analysis of the Impact of the Termination of Control Change of Narada Power Source on Its Debt Restructuring Process

According to the latest data [0], Narada Power Source (300068.SZ) is facing severe financial challenges:

• Net profit margin: -32.55% (in a state of severe loss)
• Return on net assets: -50.88% (shareholders’ equity has shrunk significantly)
• Current ratio: 0.92 (tight liquidity, below the safety margin)
• Quick ratio: 0.60 (weak short-term debt-paying ability)
• Free cash flow: -1.198 billion yuan (severe cash outflow)
• Debt risk classification:
  High Risk
  [0]

In terms of stock price performance, the company has fallen by 7.66% in the past year and 23.39% in the past three months, and the market holds a cautious attitude towards the company’s prospects [0].

A control change usually means introducing new strategic investors, bringing much-needed capital and management resources to the company. The termination of the control change will directly cause the company to miss the opportunity to obtain external capital support, having a significant negative impact on the funding sources for debt restructuring [0].

A new controlling shareholder is often a core participant and funder in debt restructuring. The termination of the control change may lead to the following consequences:

• The original restructuring plan needs to be re-formulated
• Creditors’ negotiation positions may become tougher
• The restructuring timeline may be forced to extend
• The terms of the restructuring plan may need to be renegotiated

The failure of the control change sends a negative signal to the market, which may trigger concerns among investors and creditors, thereby affecting the company’s subsequent financing capacity and restructuring negotiation position [0].

The company’s current financial situation indicates that debt restructuring is urgent:

• Continuous losses have led to continuous deterioration of cash flow
• Insufficient short-term debt-paying ability increases default risk
• The high debt risk rating requires the company to accelerate the restructuring pace [0]

1. Debt-to-Equity Swap Plan
   : Convert part of the debt into equity to reduce the debt ratio
2. Asset Disposal for Cash
   : Sell non-core assets to recover funds
3. Introduce Industrial Investors
   : Introduce strategic investors without changing control
4. Negotiate with Financial Institutions
   : Negotiate debt extension or reduction with banks and other financial institutions

• The restructuring process may be extended, increasing uncertainty
• The energy storage battery industry is highly competitive, and there are challenges in performance improvement
• Need to pay attention to the impact of regulatory policy changes on restructuring

From the perspective of technical analysis [0], Narada Power Source currently shows the following characteristics:

• Trend Judgment
  : Sideways, no clear trend
• MACD Indicator
  : Death cross signal, bearish
• KDJ Indicator
  : In the oversold area, there may be a rebound opportunity
• Price Range
  : Support at $15.48, resistance at $16.92
• Beta Coefficient
  : 0.73 (volatility lower than the market)

The termination of the control change of Narada Power Source has multi-dimensional negative impacts on its debt restructuring process, mainly reflected in three aspects: funding sources, restructuring plan formulation, and market confidence.

1. The termination of the control change increases the uncertainty of debt restructuring
2. The deterioration of the company’s financial situation requires seeking a new restructuring plan as soon as possible
3. Need to balance the interests of all parties and formulate a practical and feasible restructuring plan
4. Introducing industrial investors may become an alternative plan

• The company’s specific announcements on the debt restructuring plan
• The attitude of the creditor committee and negotiation progress
• The approval attitude of regulatory authorities
• The company’s business transformation and profitability improvement situation