High-speed rail builder China Railway swaps out debt for US$1.8 billion in fresh cash
The company, at the forefront of the country’s ‘railway diplomacy’, is expected to play a big role in the country’s belt and road global trade push
China Railway Group, which spearheads the country’s ‘railway diplomacy’ push to extend its influence around the world, has won fresh funding of 11.6 billion yuan (US$1.8 billion) by swapping debt into equity under a government-backed initiative to help state firms cut debt.
According to a stock exchange filing, the company said nine investors took part in the swap, with the new money going to four of its subsidiaries to lower their debt levels, while also cutting the parent company’s stakes in the four.
The company is the latest state-owned enterprise to effect a debt-to-equity swap under a programme first introduced in 2016 as the authorities fretted over high debt levels at state firms. The idea is to have holders of debt in the company take stock holdings instead, helping the companies and avoiding lenders having to write off bad debt.
China Railway Group is at the forefront of China’s push to build high-speed rail networks as part of Beijing’s global diplomatic efforts, and is expected to play a large role in the country’s “Belt and Road Initiative” to link China with the world through trading links and infrastructure.
It has worked on projects in Indonesia, Laos, Russia and Ethiopia, according to its website, but has also had some setbacks. In 2016 private US firm XpressWest terminated a joint venture with China Railway to build a high-speed line between Las Vegas and Los Angeles, while a planned high-speed project in Venezuela failed the same year as the country’s economy collapsed.
