Foreign banks have filed a writ seeking principal and interest worth US$1.17 million from Hubei International Trust and Investment Corp (Hitic) and Yi F Trading, the unlisted window company of Hubei's provincial government. Hitic is the seventh Itic known to have run into debt repayment problems after the high-profile collapse last month of Guangdong International Trust and Investment Corp (Gitic). The Hong Kong branches of Japanese lenders Sakura Bank and Asahi Bank have filed a writ in the High Court claiming the amount from Yi F Trading and Hitic as guarantor of the loan. Yi F Trading is reportedly the subject of claims for a combined HK$87.5 million from two other firms, one of them the Bank of Tokyo-Mitsubishi. Yi F Trading is among a growing number of mainland corporates facing financial difficulties amid a credit squeeze sparked by the Gitic closure. Yi F officials were unavailable for comment, while Hitic said its finances and operations were normal. A Hitic official said: 'We don't have liquidity problems and have never missed any foreign debt repayment. There is controversy surrounding the [specified] issue, which has to be settled with the banks.' Another official said Hitic had repaid all outstanding foreign loans of about US$60 million last year but could not confirm whether its many business dealings and loan arrangements with Yi F Trading included the specified guarantee. Another Itic, Guangdong Overseas Chinese Trust and Investment Corp (Goctic), last week defaulted on a foreign debt repayment for the third time in five months. Banking sources said Goctic had failed to repay principal of about $5.8 million in the last instalment of a $17.5 million loan arranged by SocGen Asia. But fellow fund-raising arm of the Guangdong provincial government, Guangdong Enterprises (Holdings) (GDE), yesterday met an interest payment of about $22 million on a $500 million bond maturing in 2007. A source close to GDE dismissed concerns its listed arm, Guangdong Investment, would use proceeds of about $26.7 million from a proposed three-year convertible bond issue to help relieve the financial stress on its parent. Agnes Lee Wing-see, associate director of rating agency Standard & Poor's, said it was positive news that GDE had been able to make the coupon payment as failure to do so would have had grave consequences for its future fund-raising ability.
