Zhejiang Communications Investment Group, a state-owned road investment company, plans to issue 1.5 billion yuan (HK$1.84 billion) of one-year bonds this month, as heavy debt and cash shortages plague mainland infrastructure companies. Investment in construction and operation of highways is the company's core business. Its roads connect Hangzhou with Ningbo and Shanghai, among others. Zhejiang Communications forecasts a 398 million yuan shortage in expected operating expenses of 1.95 billion yuan this year. The company plans to allocate 25 per cent of the bond proceeds to operating expenses for its expressways. The rest will be used to pay off debt, says its bond prospectus. 'The company's debt financing is rather large as it has a heavy debt burden. As a transport company, loans are the company's main form of debt financing. The short-term debt repayment pressure is substantial.' As of June 30, the company had 11.18 billion yuan of short-term debt and 55.85 billion yuan of long-term debt. Last year, it paid 3.6 billion yuan in interest. During the first half, the company suffered a net cash operating outflow of 543.3 million yuan, compared with inflow of 7.39 billion yuan last year. Net cash fell by 4.24 billion yuan in the first half, against a rise of 758.8 million yuan last year. As of June 30, Zhejiang Communications' gearing ratio - a measure of financial leverage - was 72.12 per cent. The low current ratio - a measure of a company's ability to pay short-term obligations - was at 0.79 per cent. Meanwhile, the low quick ratio - an indicator of a company's short-term liquidity - stood at 0.68 per cent. Financing costs in the first half amounted to 1.7 billion yuan. For this year, Zhejiang Communications plans to invest 3.27 billion yuan, 4.85 billion yuan next year and 6.72 billion yuan in 2013. 'Given that the company is in the capital-intensive sector of expressways, investment, construction and operation of expressways require high capital outlay and long gestation periods. As our projects progress, our debt and interest payments may increase, so there may be pressure on capital expenditure in the next few years,' it said. Last year, the company posted a net profit of 2.12 billion yuan and revenue of 23.38 billion yuan.