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Jilin seeks cash input by State

The mainland's Jilin Chemical Group, parent of Hong Kong-listed Jilin Chemical Industrial Co (JCIC), has applied to Beijing for a cash injection into its 19.9 billion yuan (about HK$18.49 billion) ethylene project.

JCIC spokesman Wang Delin said an injection would help reduce the parent company's debts, because its investment of 12.5 billion yuan came from bank borrowings.

'If the parent company can be relieved of its debt-repayment pressure, it will be beneficial to the operation of the ethylene project,' he said.

Jilin Chemical Group has seven of the production facilities, and JCIC has four. JCIC has a priority option to buy all the facilities before 2002. Analysts are concerned about the parent's ability to finance the project.

As JCIC's four facilities will sell ethylene and other products as feedstock to the remaining facilities, the parent's ability to finance the project and operate it profitably will affect the performance of the JCIC units.

Mr Wang said he was confident the government would support the project, which was a key item in the Eighth Five-Year Plan between 1991 and 1995.

Jilin Chemical Group has posted a first-half loss of 231.25 million yuan, hit by rising costs for raw material and falling product prices, as well as high finance costs and depreciation of new equipment.

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