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The US$5.59 billion restructuring plan of debt-ridden Guangdong Enterprises (Holdings) (GDE) was completed yesterday, two years after the company began negotiations with creditors.

The landmark restructuring is expected to present a model for the handling of other government-backed insolvent enterprises.

The company said yesterday the restructuring plans for GDE - the insolvent investment arm of the Guangdong government - and its 40 per cent-owned Guangdong Investment (GDI) were achieved after months of intense negotiations between the two companies and the creditors.

The key element of the plans was an injection of an 81 per cent stake of Dongshen Water Supply, Hong Kong's primary source of water since 1965, into GDI by the provincial government.

Meanwhile, existing assets of the GDE group, which include two affiliates, Nam Yue (Group) and Guangnan (Holdings), were reorganised by asset class into new companies with improved management and capital structures.

'This restructuring is a remarkable and historic achievement,' said Wu Jiesi, chairman of GDI and former assistant governor of Guangdong province.

'Consistent with international practices, agreements were achieved through commercial and consensual negotiations,' Mr Wu said.

The announcement cited a comment from Goldman Sachs, GDE's adviser in the restructuring, which invested US$20 million in GDI, showing its confidence in the group. Pointing to the success of the restructuring, it said that the efforts send 'a resounding message about China's commitment to the international lending community, international capital markets and the reform of state-owned enterprises'.

GDE's restructuring began in December 1998 and the related restructuring plan in December last year. The key proposal, the injection of the Dongshen Water project, was twice delayed amid uncertainty over its future supply contract with the SAR Government, until it was backed by 99.99 per cent of GDI shareholders in September.



Debt-laden Guangdong Enterprises' landmark reorganisation completed