Cement maker China Shanshui says it can’t pay bond interest due to lack of seal
Latest chapter in hostile takeover saga
Hong Kong-listed China Shanshui Cement says it cannot distribute interest on its 2017 notes to bondholders because of the lack of a company seal, highlighting the challenges facing investors trying to get paid after a series of domestic bond defaults since November.
While the company had remitted 74.4 million yuan (HK$88.5 million) of interest due on Thursday on the 6.2 per cent, 1.2 billion yuan note maturing in 2017 to the bank account designated by mainland China’s interbank clearing house, the money could not be distributed because the company did not have the seal of its main operating subsidiary Shandong Shanshui Cement, it said in an exchange filing on Thursday. The seal had already been made invalid, it said.
The announcement represents the latest chapter in China Shanshui’s difficulties taking control of the cement maker’s mainland operations from founder Zhang Caikui via a hostile takeover. The saga has prompted sharp moves in China Shanshui’s US dollar bonds, with prices falling to as low as 63 cents on the dollar in November. They dropped again earlier this week after China Shanshui’s other main shareholders, China National Building Material and Asia Cement decided not to proceed with their proposal to acquire the company.
China Shanshui said in January that it had obtained all seals except the one at Shandong Shanshui. Chinese companies need seals to institute management changes so they can be registered with the government. The seals were held by the ousted directors, who allegedly brought in gangsters to help them, China Shanshui said in a filing in December.