2012-08-14

Chinese debts come due

Shining a Light on Too Big to Fail in China
On July 12, the Xinyu city congress said it approved a proposal to incorporate 500 million yuan worth of loans LDK Solar borrowed from Huarong International Trust Co. into its annual budget. Xinyu also sent officials to LDK Solar to get involved in daily operations, and the officials have remained there.

Meanwhile, the government of Hefei, in eastern China's Anhui Province, where LDK Solar has a production facility, has started to mull bailout measures, a bank source in Jiangxi said.

This is not the first time the government has had to help the company. At the end of 2009, LDK Solar sold stakes in a subsidiary to a provincial government company for 1.5 billion yuan. This was intended to relieve a cash crunch brought on by the global financial crisis.

Jiangxi LDK Solar Seeks Help from Energy SOE
Debt-ridden Jiangxi LDK Solar, led by the local government, has approached China Energy Conservation and Environmental Protection Group (CECEP) as a potential buyer.
Previous coverage here.

Beijing Loan Guarantee Firm Teeters on the Edge
A prominent loan guarantee firm in Beijing will go bankrupt if no restructuring plan can be agreed upon by August 20.

Zhongdan Investment Credit Guarantee Co. Ltd., established in 2003, has been caught in a liquidity crisis since January, when its capital chains reportedly started falling apart. This prompted banks and clients allegedly tricked into depositing their borrowed money with the firm to demand immediate repayment.

Investigations led by Beijing's municipal finance work bureau found that the firm has guaranteed more than 3 billion yuan in outstanding loans. This involved 22 banks and 294 enterprises in Beijing.
Previous coverage here and here.

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