Shares in debt-ridden Shanghai Hai Xing Shipping soared to their highest level in six months yesterday after the company announced it had successfully refinanced its debt burden and reduced interest expenses by 22 million yuan (about HK$20.46 million) this year. Company secretary Ye Yumang said the H-share company's long-term fixed asset loans would be charged at the prevailing interest rate of 12.42 per cent, effective from late last month. The People's Bank of China slashed interest rates in May and August, cutting the rate on fixed-asset loans with a maturity of five years or more to 12.42 per cent from the previous 15.3 per cent. The cuts applied only on new loans or refinanced-loans. Hai Xing only began to benefit from the current lower interest rates from September 21. The lower interest rates will benefit the company more next year when the full-year impact is felt. Under central bank rules, loans are adjusted to prevailing interest rates one year after they were secured and thereafter reviewed on an annual basis. Two months ago, Hai Xing chairman Li Shaode said that cutting interest costs would be the company's top priority. The lighter interest burden will give much-needed relief to Hai Xing, which had outstanding debts of 3.05 billion yuan as of September 20. The stock closed at 69 cents yesterday, up nine cents or 15 per cent as the Hang Seng China Enterprises Index, tracking performance of 22 H-share companies, edged up 7.33 points to 818.84. Hai Xing's interest expenses soared 75 per cent to 271 million yuan in the first half, when the company made net losses of 84.89 million yuan, the first H-share company to bleed such red ink. Rising depreciation charges, over-expansion and competition in the already-sluggish domestic shipping sector multiplied the company's problems, analysts said. Hai Xing general manager Zhang Jieming earlier said the company would take two years to recover. Credit Lyonnais Securities expected Hai Xing to make losses of 156 million yuan this year, before taking into account lower interest costs.