Cloud Live Technology in second China onshore bond default
Cloud Live winds up 240.63 million yuan short of what it needs to meet repayment obligations on debt issued during its restaurant days in 2012
Troubled internet technology firm Cloud Live Technology Group defaulted on bond interest and bond repurchase commitments yesterday, making it the second mainland-listed firm to have done so after Shanghai Chaori Solar Energy Science & Technology's bond default last year.
Chaori was the first company to default in the mainland's onshore bond market.
Cloud Live had been able to raise only 161.4 million yuan (HK$202.8 million) to re- pay debt, 240.63 million yuan short of the amount needed to meet its repayment obligations yesterday, it said in a filing to Shenzhen's stock exchange.
"The company and its controlling shareholder plan to raise funds via third-party financing and continue to chase trade receivables," it said.
Cloud Live said in its preliminary results report that it had unaudited net assets of 26.55 million yuan at the end of last year, but did not rule out the possibility it could have had negative net assets.
It expected to post a net loss of 40 million to 60 million yuan in the first quarter of this year, after an unaudited net loss of 562.5 million yuan last year, its second annual loss in two years.
As China's economy slows and the central government shows a new tolerance for allowing isolated corporate defaults, onshore bond defaults are expected to increase.