Shanxi Coal Hit By Qingdao Port Scandal

Here's a story I missed from a couple of weeks ago: China's Shanxi Coal sues company at centre of Qingdao scandal

China's Shanxi Coal International Energy Group said it was suing the company at the centre of the alleged metals financing fraud at Qingdao port and its parent for over $177 million in missed payments the two had guaranteed, a move that suggests the scandal is starting to affect other sectors in China.

Shanxi Coal said in a statement to the Shanghai Stock Exchange on Thursday it was suing three clients over the missed payments as well as Decheng Mining and its parent, Dezheng Resources, and another firm that had acted as guarantors.

The firm had only ￥700 million in profit in 2013, but if it cannot recover any of its debt, it will have to writedown ￥1 billion in assets at year end. The firm also has suspended bonds due to its financial difficulty and a failure to recoup capital from Dezheng will impact the firms ability to repay.

青岛港“骗贷门”发酵 山煤国际资产“毒”发

By the end of May this year, the Qingdao Port exposed copper warehouse repeat mortgage financing event. The event is the protagonist Chen Hung-based control of Germany is the Department - the group's metal mining industry with the same number of NCN stored in the port of Qingdao to repeat mortgage banks. According to preliminary statistics, involving nearly billion Piandai door.

Germany is ten billion by the Department of influence Piandai case, Mountain Coal International (600546.SH) toxic assets are fermented. June 27, Mountain Coal International disclosed a case of litigation, a wholly owned subsidiary Shanxi Coal Coal Import & Export Co., Ltd. (hereinafter referred to as "Mountain Coal Coal") in the conduct of international trade and domestic trade process alumina, the downstream Customer Quang Nam (Hong Kong) Limited, Allied International Holdings Limited and Mining Co., Ltd. Qingdao Yida contract fails to pay the due payment over one billion yuan. Among them, Germany is the first line of Lung Qi, Germany above transactions are resource is the guarantor.

Mountain Coal International Deputy General Manager admitted that this money is likely to be more than a billion of bad debts. "The difficulty appears on the downstream customers of operations, capital chain problem. Coincides with the security company is Germany Department of billions Piandai case, his side of things is relatively large."

According to the Economic Observer newspaper reporter to available information, the parent company of Mountain Mountain Coal International Coal due to poor management, the "11 Mountain Coal debt" bonds have been suspended from listing on May 9. Once Mountain Coal International outbreak of toxic assets, more than one billion payment to become bad debts, Mountain Coal's operations will continue to deteriorate. And all this will affect the Hill Coal Company debt payment.

Toxic Assets

July 2, Mountain Coal International Deputy General Manager told the Economic Observer newspaper reporters, "We have just sued, not trial." She said, Mountain Coal Coal has submitted the complaint and other legal proceedings in the High Court on June 25 in Shanxi Materials, Shanxi Provincial High Court has received the material.

Reporters learned that the plaintiff Mountain Coal coal purchases from upstream firm CITIC Resources Australia Ltd. and other aluminum, aluminum ingots, copper and other goods and signed procurement contracts in foreign trade, and were sold to downstream firms Guangnan company, Allied International and its corresponding foreign sales contracts signed.

"At the time when the contract, Qingdao Decheng want to earn fees from the middle point, they are specified in the upstream and downstream." Mountain Coal International secretaries to do the above sources, Qingdao Decheng specified upstream resources of CITIC Australia wide downstream enterprises Southern Company, the new Union International.

The above Mountain Coal International Deputy General Manager said, "It was NCN is a prestigious position inside the industry of the company, after investigation it was decided to cooperate with them, so these agreements, the main consideration is the risk management and control."

After the signing of a cooperation agreement, Shanxi Coal coal to its upstream business in favor of issuing long-term credit, but also the delivery warehouse on the next business items above the 15 foreign sales contracts and other goods to downstream firms the right to transfer the certificate, but the widespread downstream businesses Southern Company and its affiliated companies, but fails to agree a new contract for the sale of its foreign trade payments $ 120 million. The contract is the guarantor of long first odd.

But this is only the tip of the iceberg owed money.

In addition, Mountain Coal coal to Qingdao Tak-shing to buy alumina, and sold to Qingdao Yida Mining Limited. Among them, Germany is the resources to provide joint liability guarantee for the Qingdao Yida domestic sales under the previous contract's price payment and other obligations.

After the signing of the purchase contract and domestic domestic sales contract, pay it to the mountains upstream coal coal enterprises in Qingdao Tak-shing, but the downstream enterprises in Qingdao Yida failed to pay the price of 350 million yuan to the mountains of coal coal. The contract is a German guarantor positive resources.

Coal Coal Mountain above the loan has been in arrears total foreign trade more than one billion yuan.

Mountain Coal Coal six defendants are sued, purely from the equity relationship, Qingdao Tak-shing, Germany are resources Hualong first odd, Quang Nam company, Allied International, Qingdao Yida not associated with. However, the former was willing to provide guarantees for the latter.

Mountain Coal International Deputy General Manager pointed out that "the law can not prove they have anything." General collateral for others, or have equity relationships, or personal relationships are particularly good, either the presence of guarantee mutual behavior. As for the behavior of the above guarantees, these secretaries do not read source said.

Several security companies in control of the above, it is based Hung Chen. Chen was born in Shantou, Guangdong, is Germany is the actual control of resources, including a subsidiary of Qingdao Tak-shing, Hualong first odd and so on. 2010, to 3.35 billion yuan Chen Forbes China Rich List 332.

"Mountain Coal Coal is now actively recover loans, mainly with Quang Nam, the new joint two downstream companies money, and Germany because of the guarantee did, so we sued them, freeze preservation of their property." Mountain Coal International Dong Office secretary told the Economic Observer newspaper reporter.

Can not be ignored is that, in addition to Mountain Coal International, Germany is also into other Department lawsuit.

Chen Ji Hong-last public appearance was in April 11, he and Hill Coal chairman Guo, Guangzhou Party Secretary Luo Weifeng Luogang visited Luogang area. April 29, Chen Hung base due Qinghai Provincial Committee and Party Secretary Mao Xiaobing Xining sacked relevant departments were asked to assist the investigation.

Germany is the system which has become an important incident ten billion Piandai fuse.

June 20, creditor committee composed of creditor banks issued a set of statistical data, according to the data show that Germany is the Group's exposure in Qingdao local bank credit was 66.7 billion yuan, involving a total of 17 banking institutions. Affected by this, many creditors are scrambling to freeze the Department of German assets. According to Reporters available information, resources, Germany is holding Shenzhen Huomei Hongjun Aluminium Trading Co., Ltd. 30% stake. Today, this part of the shares subject to the multi-waiting freeze, frozen for the period from 18 June 2014 to 17 June 2016.

Mountain Coal International secretaries to do the above sources, including their application to freeze the German judicial system are part of the shares of other subsidiaries. However, she said, because there are a number of creditors to apply for judicial freeze, "specifically how much money can go back, it is not clear."

Payment suspense

If more than one billion payment can not be recovered, "the end of time may be recorded in bad debt." Above Mountain Coal International Deputy General Manager said,

2013, net profit of 700 million yuan Mountain Coal International. Once more than one billion payment all become bad debts, Mountain Coal International inevitable losses, which will drag the parent company, Shanxi Coal Mountain Coal International Import and Export Group Co., Ltd. (hereinafter referred to as "Coal Hill").

Notably, mountain Coal holds 57.43% stake in Shanxi Coal International. For a long time, Hill Mountain Coal International Coal Group's results depend on hard support. In 2013, for example, Mountain Coal International operating income of 81.3 billion yuan, accounting for 63.9% of Mountain Coal revenue.

Even so, Mountain Coal still appears inevitable years of losses. In 2012, total revenue of Coal Hill 109 billion yuan, net profit attributable to equity holders of -6.2 billion. 2013, total revenue of Coal Hill 127.3 billion yuan, net profit attributable to equity holders of -4.1 billion. Due to two consecutive years of losses, Mountain Coal "11 Mountain Coal debt" bond continuous suspension began April 30.

Mountain Coal, a middle class, told reporters recently the company received the decision sent to the Shanghai Stock Exchange, the company issued corporate bonds in 2011, suspended listed since May 9, 2014, bonds referred to by the "11 Mountain Coal debt" was renamed for "Mountain Coal pause."

Coal Hill above the middle parties, decline to change the company's development, when he was chairman of Du Jianhua Coal Hill in 2012 requires Mountain Coal Resources and Germany being launched all-round cooperation in various fields, and proceeded to organize the relevant requirements of the relevant departments detailed research and approval of the project to achieve the project landing.

February 20, 2012, the successful establishment of Guangdong Investment Limited DELHI. Companies registered capital of 100 million yuan, Mountain Coal 51%, Germany 49% stake being resources. Mainly engaged in alumina, aluminum, bauxite, copper and other nonferrous metals international and domestic trade.

March 26, 2013, the first time in Guangdong DELHI shareholder meeting, Mountain Coal chairman Guo said that Germany is a mountain of coal and industrial properties and have two very different businesses, experienced a serious cooperation prudent and careful in-depth research process, the two sides should cherish this valuable opportunity for cooperation.

That time, the development of the next three years, Guangdong DELHI development goals, relying on shareholders' advantage, according to business segment achieved significant growth in alumina project in Cambodia to advance as quickly as possible.

Guangdong DELHI expectations, in 2013 sales revenue of nearly 13.2 billion yuan, profits of 153 million yuan.

Now, with Germany being the outbreak of the Department of ten billion Piandai case, cooperation or interruption. Number of banking institutions have already requested the Department for Germany are various companies to freeze the assets of Justice. As one of Germany is the main subsidiary of the Department, Guangdong DELHI this round will be difficult to avoid judicial frozen.

Reporters learned that in turmoil edge Guangdong DELHI, now constantly recruiting senior staff, including the headquarters of financial managers, subsidiaries' financial manager positions. Once the resource shares are held by Germany were frozen, Guangdong DELHI future development will not depend Todd shareholders are the advantages of resources, which will lay the uncertainty of its future development.

All this will also affect the Mountain Coal "11 Mountain Coal debt," the payment.