Huarong comes to rescue of D'Long units
One of the mainland's leading asset management companies, established to sell non-performing loans from the Big Four state banks, will lend more than 200 million yuan to finance the beet and flax purchases of a troubled private conglomerate.
China Huarong Asset Management's provision of loans worth 230 million yuan to two subsidiaries of Xinjiang-based D'Long Group is part of a wider government bailout.
It also highlights the degree to which asset managers have been sucked into other crisis areas of the economy.
In addition to the D'Long rescue, asset managers such as Huarong have been assigned a key role in the receivership of failed mainland brokerages.
Huarong said in a statement it would extend a 200 million yuan bridge loan to cash-strapped Xinjiang Tunhe Investment to buy beets.
It will lend another 30 million yuan to textile producer Yili Tianyi Industry to buy flax fibre.
'The loans are part of the wider takeover [of the D'Long Group],' a Huarong spokesman said.
Units such as Shanghai-listed Tunhe, which controls 36 per cent of Xinjiang's beet market, and Yili Tianyi bore the brunt of D'Long's collapse after financial irregularities were uncovered at the sprawling agriculture-aviation conglomerate.
'The credibility of D'Long units and their fund-raising capability has plunged,' Huarong said. 'Some of the units' normal operations were greatly affected.'
The loans will help Tunhe and Yili Tianyi resume operations and restart purchases from tens of thousands of farmers who sell their produce to the two companies.
Huarong, which was ordered to take over D'Long in September, said the group had amassed debts of 30 billion yuan and estimated its assets at 20 billion yuan.
