Major HK Listed Cement Maker Can't Pay Bonds Issued Seven Months Ago

The defaults are starting to pile up and the latest is a cement maker from Shandong, Shanshui (0691).

According to the company's website it is the largest cement producer north of the Yangtze with production capacity exceeding 100 million tons as of 2013. Bloomberg says it is the seventh largest cement producer in China. Unfortunately, the company operates in four geographical areas: Shandong Province, Northeastern China, Xinjiang Region and Shanxi Province. A.K.A. the heart of China's slowdown.

Bloomberg: Shanshui Cement Says Cash Insufficient to Repay Onshore Debt
China faces another test in credit markets after a cement maker said it’s unsure if it can repay an onshore note due next week after a shareholder tussle stymied financing.
China Shanshui Cement Group Ltd. cited its “current cash position and the difficulties it faces in raising financing" in noting the uncertainty over repayment of the 2 billion yuan ($315.2 million) securities that were issued in April this year with a 5.3 percent coupon and mature Nov. 12. While the company has been seeking financing since June, all the financial institutions it contacted “have expressed concern in relation to the uncertainty of the management,” it said in the statement.

Things were looking up only three weeks ago: Shanshui Bonds Rise to Two-Month High on Shareholder Deposit
China National Building Material Co. and Taiwan’s Asia Cement Corp., which combined hold 37.6 percent in Shanshui and are considering a general offer, each put in $700 million at Hong Kong’s Securities and Futures Commission on Aug. 11 as cash confirmation for the possible offer as required by regulations, according to Doris Wu, chief financial officer at Asia Cement.
Hong Kong-listed Shanshui has been mired in a shareholders’ fight for control since April amid President Xi Jinping’s call to cull weaker firms in industries grappling with overcapacity. Its largest shareholder Tianrui International Holding Co. has been trying to change Shanshui’s board.

More on the battle for control, from four weeks ago: Shanshui Won't Have to Redeem Notes as Chairman to Remain
Shareholder clashes may become more common in Asia’s biggest economy as President Xi Jinping encourages the culling of weaker firms in industries that are grappling with overcapacity. Two of Shanshui’s other shareholders -- China National Building Material Co. and Taiwan’s Asia Cement Corp., which combined hold 37.6 percent -- said last month they’ll make a joint conditional cash offer to acquire all the outstanding shares they don’t already control. The duo reiterated on Oct. 9 they’re still considering that course of action.

“It’s a complicated situation as there are too many entities trying to gain control,” Annisa Lee, a credit analyst at Nomura Holdings Inc., said. “The outlook on the credit depends on what Tianrui, China National Building Material and Asia Cement will do next, if they appoint more Tianrui officials or others on the board.”

Way back in July 2015: Tianrui Says Confident It Could Help Settle Shanshui Debt

Shares in Shanshui haven't traded since April. A year earlier in October 2014, shares changed hands around about HK$ 2.70 per share, they halted at HK$ 6.29 in April.

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