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Loans Payable | 9 Months Ended
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Sep. 30, 2017
Loans Payable [Abstract] |
Loans Payable | (7) Loans Payable Short-term bank loans
|  |  |  | September 30, |  |  | December 31, |
|  |  |  | 2017 |  |  | 2016 |
Bank of Hebei |  | (a) |  | $ | - |  |  | $ | 2,162,318 |
Industrial and Commercial Bank of China (“ICBC”) Loan 1 |  | (b) |  |  | - |  |  |  | 2,883,091 |
Bank of Cangzhou |  | (c) |  |  | 6,026,910 |  |  |  | - |
ICBC Loan 2 |  | (d) |  |  | 4,218,837 |  |  |  | - |
Total short-term bank loans |  |  |  | $ | 10,245,747 |  |  | $ | 5,045,409 |
(a) | On July 8, 2016, the Company entered into a working capital loan agreement with the Bank of Hebei, with a balance of $nil as of September 30, 2017 and $2,162,318 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 5.22% per annum. The loan was due on July 8, 2017. The working capital loan is guaranteed by the Company’s CEO and Hebei Tengsheng with its land use right and real property pledged by Hebei Tengsheng as collateral for the benefit of the bank. The loan was repaid on July 6, 2017.
(b) | On September 13, 2016, the Company entered into a working capital loan agreement with ICBC, with a balance of $nil as of September 30, 2017 and $2,883,091 as of December 31, 2016, respectively. The loan bears a fixed interest rate of 4.5675% per annum. The loan was due on October 19, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan was repaid on September 7, 2017.
(c) | On December 5, 2016, the Company entered into a working capital loan agreement with the Bank of Cangzhou. The loan was drawn on January 3, 2017, with a balance of $6,026,910 as of September 30, 2017. The loan bears a fixed interest rate of 6.09% per annum. The loan will be due on January 3, 2018. The working capital loan is secured by the Company’s land use right and guaranteed by Orient Paper Shengde with its production equipment and plant as collateral for the benefit of the bank.
(d) | On January 10, 2017, the Company entered into a working capital loan agreement with the ICBC, with a balance of $4,218,837 as of September 30, 2017. The working capital loan was guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. The loan bears a fixed interest rate of 4.5675% per annum. The loan will be due on January 17, 2018.
As of September 30, 2017, there were guaranteed short-term borrowings of $10,245,747 and unsecured bank loans of $nil. As of December 31, 2016, there were guaranteed short-term borrowings of $5,045,409 and unsecured bank loans of $nil. The average short-term borrowing rates for the three months ended September 30, 2017 and 2016 were approximately 5.30% and 8.19%, respectively. The average short-term borrowing rates for the nine months ended September 30, 2017 and 2016 were approximately 5.28% and 8.53%, respectively. Long-term loans from credit union As of September 30, 2017 and December 31, 2016, loans payable to Rural Credit Union of Xushui County, amounted to $7,473,368 and $4,843,592, respectively. On April 16, 2014, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 5 years, which is payable in various installments from June 21, 2014 to November 18, 2018. The loan is guaranteed by an independent third party. Interest payment is due quarterly and bears the rate of 0.72% per month. In August 2015, after giving the required notice to the Rural Credit Union of Xushui County in accordance with the terms on the agreement, the Company repaid a portion of the loan in an amount of $188,341, of which $82,870 was paid ahead of its original repayment schedule as of September 30, 2017. As of September 30, 2017 and December 31, 2016, total outstanding loan balance was $1,295,786 and $1,239,729, respectively, which is presented as non-current liabilities in the condensed consolidated balance sheet. On July 15, 2013, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 5 years, which is due and payable in various installments from December 21, 2013 to July 26, 2018. The loan is secured by certain of the Company’s manufacturing equipment with net book value of $8,579,118 and $9,813,294 as of September 30, 2017 and December 31, 2016, respectively. Interest payment is due quarterly and bears a fixed rate of 0.72% per month. In August 2015, after giving the required notice to the Rural Credit Union of Xushui County in accordance with the terms on the agreement, the Company repaid a portion of the loan in an amount of $195,875, of which $75,336 was paid ahead of its original repayment schedule as of September 30, 2017. As of September 30, 2017 and December 31, 2016, the total outstanding loan balance was $3,766,818 and $3,603,863 respectively. Out of the total outstanding loan balance, current portion amounted were $3,766,818 and $nil as of September 30, 2017 and December 31, 2016, respectively, which are presented as current liabilities in the condensed consolidated balance sheet and the remaining balance of $nil and $3,603,863 are presented as non-current liabilities in the condensed consolidated balance sheet as of September 30, 2017 and December 31, 2016, respectively. On April 20, 2017, the Company entered into a loan agreement with the Rural Credit Union of Xushui County for a term of 2 years, which is due and payable in various installments from August 26, 2017 to April 19, 2019. The loan is guaranteed by Hebei Tengsheng with its land use right pledged as collateral for the benefit of the bank. Interest payment is due quarterly and bears a fixed rate of 0.6% per month. As of September 30, 2017 the total outstanding loan balance was $2,410,764, out of which $90,404 and $2,320,360 are presented as current and non-current liabilities in the condensed consolidated balance sheet respectively. Total interest expenses for the short-term bank loans and long-term loans for the three months ended September 30, 2017 and 2016 were $320,077 and $354,011, respectively. Total interest expenses for the short-term bank loans and long-term loans for the nine months ended September 30, 2017 and 2016 were $907,785 and $1,172,692, respectively. Financing with Sale-Leaseback The Company entered into a sale-leaseback arrangement (the “Lease Financing Agreement”) with CNFTFL on June 16, 2013, for a total financing proceeds in the amount of RMB 150 million (approximately US$23 million). Under the sale-leaseback arrangement, Orient Paper HB sold the Leased Equipment to CNFTFL for RMB 150 million (approximately US$23 million). Concurrent with the sale of equipment, Orient Paper HB leases back all of the equipment sold to CNFTFL for a lease term of three years. At the end of the lease term, Orient Paper HB may pay a nominal purchase price of RMB 15,000 (approximately $2,260) to CNFTFL and buy back all of the Leased Equipment. The sale-leaseback was treated by the Company as a mere financing and capital lease transaction, rather than a sale of assets (under which gain or loss is immediately recognized) under ASC 840-40-25-4. All of the Leased Equipment were included as part of the property, plant and equipment of the Company for the periods presented; while the net present value of the minimum lease payment (including a lease service charge equal to 5.55% of the amount financed, i.e. approximately US$1.36 million) was recorded as obligations under capital lease and was calculated with CNFTFL’s implicit interest rate of 6.15% per annum and stated at $25,750,170 at the inception of the lease on June 16, 2013. Orient Paper HB made all payments due according to the schedule prior to December 15, 2014. On December 15, 2014, Orient Paper HB stopped making principal payments and entered into negotiations with the CNFTFL regarding a modified payment schedule for the remaining obligations. On July 1, 2015, Orient Paper HB, China Orient, and other guarantors of Lease Financing Agreement, entered into an agreement (the “2015 Agreement”), to amend and restate the Lease Financing Agreement entered into in 2013 (the “2015 Agreement”). The 2015 Agreement sets forth a modified and extended payment schedule with respect to the remaining payment obligation, with the final repayment date extended to June 21, 2017. Under the 2015 Agreement, the interest accrues at a rate of 15% per annum starting on June 16, 2015, and is payable on the 20th of every March, June, September and December until the principal is paid off, except for the first payment, which is due on July 31, 2015. Orient Paper HB made all payments due according to the modified schedule prior to June 20, 2016. Orient Paper HB made partial payments in the following payment obligations as well as interests on overdue balance in accordance with the 2015 Agreement until August 24, 2017, when the remaining overdue amount was fully paid off. All the Lease Equipment was bought back at the nominal price according to the agreement. The balance of the long-term obligations under capital lease were $nil as of September 30, 2017 and December 31, 2016, and its current portion in the amount of $nil and $8,786,528, respectively. Total interest expenses for the sale-leaseback arrangement for the three months ended September 30, 2017 and 2016 were $213,571 and $237,053, respectively. Total interest expenses for the sale-leaseback arrangement for the nine months ended September 30, 2017 and 2016 were $789,322 and $526,912, respectively. As a result of the sale and leaseback of equipment on June 16, 2013, a deferred gain in the amount of $1,379,282 was recorded. The deferred gain was amortized over the lease term and as an offset to depreciation of the Leased Equipment. In term of the extension of the new payment schedule, the deferred gain was amortized over the remaining lease term up to June 21, 2017.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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