Dio Waterhua: Plans to accept real estate from 19 property developers including Longfor and Vanke as debt repayment to offset accounts receivable of 155 million yuan

On March 20, DiAo Water Huashi (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), Chengdu New Hope Real Estate Co., Ltd., and others, as debt repayment.

A more straightforward way to say this is “debt repayment with property.” The announcement states that the debtor will use their completed and under-construction commercial properties (including residential, shops, apartments, 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: one, the company and the debtor sign a written agreement to register the relevant properties online for the purpose of debt offset, with the company hiring an appraisal firm to evaluate the properties; two, the company and the debtor sign a written agreement for the debtor to sell the properties within a specified period, with the proceeds from the sale used to repay the company’s debt.

The announcement states that all debtors involved in this non-cash asset debt repayment 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 used for debt repayment based on the assessed value from online registration or market price standards.

DiAo Water Huashi has engaged an appraisal firm to evaluate the properties involved in the online registration and proposed registration for debt repayment. The evaluation results show that the properties (both registered and proposed for registration) used for debt repayment had an assessed value of 64.5475 million yuan as of January 31, 2026 (the valuation 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 for asset offsetting and using property to settle receivables is the best way to mitigate the risk of collection and ensure asset security. It also helps maximize the protection of the company’s and shareholders’ interests.”

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