(Yicai) Jan. 10 -- China’s securities regulator has issued a warning letter to Chinese distressed asset manager Goho Asset Management for three main issues.

Goho was involved in the irregular use of raised funds and untimely and inaccurate disclosure of information, the Anhui province branch of the China Securities Regulatory Commission said in a warning letter to the Hefei-based asset management firm yesterday.

After Goho received the warning letter, the company’s bond trustee Western Securities released a statement claiming that the funds mentioned in the letter were bonds worth over CNY1.2 billion (USD170 million) that Goho issued in May 2022. However, the firm had already returned the irregularly used funds to the related special account on Sept. 15 last year, Western Securities noted.

Goho announced on Jan. 2 that it was unable to repay debts worth over CNY298 million (USD41.7 million), which resulted in some of the company’s assets being frozen or seized. Goho has four existing bonds worth nearly CNY2.2 billion, three of which, with a total value of CNY939 million, are due this year.

The debt default, major related lawsuits, asset freezing, and the warning letter may adversely impact Goho’s business operation and solvency, Western Securities added.

On Jan. 8, China Lianhe Credit Rating downgraded Goho’s and its bonds’ long-term credit rating because the company’s announcement on Jan. 2 reflected its obvious liquidity risks and substantial problems in debt repayment.

Goho’s monetary capital was tight, and its debt repayment pressure was high as of the end of the first half of last year, the firm said in its latest semi-annual earnings report. Its balance of interest-bearing debt was almost CNY6.4 billion as of June 30.

Goho was among China’s first batch of local asset management firms, according to its website. As of the end of 2021, Goho had net assets of CNY5.3 billion, a total amount of non-performing assets purchased, including dozens of banks and nearly a thousand enterprises, of over CNY150 billion (USD20.9 billion), and more than 100 funds of various types with a scale of CNY100 billion under management.

Editor: Futura Costaglione