Yaxing disposes of assets as Gu empire falls

Yangzhou Yaxing Motor Coach, another troubled company run by Guangdong Kelon Electrical Holdings' former chairman Gu Chujun, is restructuring hundreds of millions of yuan in assets to shore up its unstable financial position.

Yaxing, majority owned by Gu, plans to dispose of up to 180 million yuan in non-core assets due to losses in 2003 and last year and a high level of accounts receivable, said the Shanghai-listed firm in an announcement on yesterday.

Yaxing chairman Gu and directors Jiang Yuan and Yan Guoru, who are also part of Kelon's management, are under arrest on the mainland for alleged economic crimes related to Kelon, a leading Chinese producer of refrigerators and air-conditioners.

Yaxing plans to spend up to 150 million yuan for the land use rights of up to 6.8 hectares it is leasing so it can pledge it as collateral for loans. The bus manufacturer said it was suffering 'much inconvenience' because it could not use the land as collateral.

'Due to the negative effects of our controlling shareholder [Gu] and the high level of our accounts receivable, our operations suffered from a shortage of working capital,' said the mainland firm in its third quarter report.

Yaxing reported a net operating cash outflow of 18.71 million yuan and an operating loss of 2.87 million yuan. It posted a net loss of 69.26 million yuan last year.