Stop the bleeding: private firm sends SOS over China’s debt-cut efforts
Zhejiang-based DunAn Group is appealing to its home province for a bailout as the central government tightens its grip on financial risks
The bad news from private Chinese manufacturing conglomerate DunAn Group reached a head this week, catching many investors off guard.
The 31-year-old group based in Hangzhou, Zhejiang province, announced it was cancelling plans to issue two short-term bonds to raise a total of 900 million yuan (US$141.57 million) as well as suspending trading in two bonds and the stocks of two listed subsidiaries.
The announcement came just days after the group, which employs about 29,000 people, made a direct appeal to the province’s governor, Yuan Jiajun, for a bailout.
According to an internal document seen by the South China Morning Post, the group said it was facing a liquidity crisis as nationwide deleveraging efforts in the financial system pushed up the cost of corporate financing.
The group, which started out making air conditioner and refrigerator components before branching out into agriculture and financial services, had 42 billion yuan in liabilities and 64.8 billion yuan in assets by the end of last year.
The debt pile has risen to 45 billion yuan, including payable bonds worth 12 billion yuan and loans mainly from banks and financial institutions in the province, according to the document.