On July 19, 2016, a staff in Dalian, Northeast special steel base check the product surface quality. Dongfang IC
7 times in a row in 4 months time a bond default, Northeast special steel opened a local State-owned enterprises bonds first creditors promised not to "debt-for-equity" only after more than a month, Northeast special steel began unilateral plans to "swap" out of the Woods.
So, what crushed this second-largest state-owned enterprises in Liaoning province, the largest special steel enterprise, let it become a "breach of Kings"? The seeds of the crisis, in 2008 for the implementation of technical upgrading of dongbei special steel and huge investments, have been planted.
6 years up to 2014, Northeast special steel invested 30 billion yuan, the implementation of special steel enterprises at home and abroad the most large-scale technical transformation, and scheduled for completion in the next 3 years special steel at the high end of the market for the new layout, high temperature alloys, high-strength steel and other products to domestic civilian market share 35%, 1/3 products for export or import substitution.
Now the three-year plan has not been completed, upgrade is not complete, Northeast special steel was already heavily indebted.
Initial 30 billion technology investment, Northeast special steel with debt
In 2004, Northeast special steel by the original three national key steel enterprises-Dalian special steel, Fushun special steel, beiman special steel restructuring, mainly engaged in special steel, including submarines, rockets, etc. Its main shareholder is Liaoning Provincial SASAC. As the largest steel company in Northeast China, Liaoning province, Northeast special steel into China's largest special steel group, and now it faces debt dilemma of a bond default.
State Bank disclosure of financial data show that by the end of September 2015, Northeast special steel 52.726 billion yuan in total assets, total liabilities amounted to 44.473 billion yuan, the asset-liability ratio of 84.35%, companies facing liquidity pressures. And in recent years because of defaulted loans, Northeast special steel have been included in the national list of lose the trust of the people many times by the Supreme Court.
Why would the dongbei special steel in such a predicament? Surging News (www.thepaper.CN) report found that excluding factors such as economic downturn leads to iron and steel industry in the doldrums in recent years, initial 30 billion technology upgrade investment size is too large, or the dongbei special steel one of the root causes of the debt.
Bond credit analysis report said, Northeast special steel remained profitable in recent years, but size is not large, and larger companies other receivables capital occupied larger and longer. In particular, since 2008, Dalian, Northeast special steel base relocation and renovation, leading to significant increase in debt burden, debt to asset ratio continued to increase from 2007 in 65.85% 2010 87.35%, plus follow-up added a large sawmill investments, asset-liability ratio of the company in recent years has remained at between 84% and 85%, heavy debt burden, debt service indicator is poor.
According to the Liaoning daily reported in September 2013, and in recent years, the dongbei special steel group base synchronization carried out a large-scale comprehensive technological transformation. Dalian base to invest 16 billion yuan to introduce world-class technology and equipment, built the world's most advanced 10 modern professional production line of special steel; base spend billions of Yuan in Fushun, forming a national defense and high-tech field of world-class technology and equipment North base is planning to invest 22.7 billion yuan, a comprehensive technology.
Liaoning daily reported July 2014, according to the statistics, Northeast special steel has invested nearly 30 billion yuan, the implementation of special steel enterprises at home and abroad the most large-scale technical transformation. At the time, Northeast special steel plan the next 3 years to complete special steel at the high end of the market for the new layout, high temperature alloys, high-strength steel and other products to domestic civilian market share 35%, 1/3 products for export or import substitution.
Today, three years yet to come, Northeast special steel with large debts. If technology upgrades are continuously powered, but huge investment in steel boom, Northeast special steel at a time of sluggish industry had to accept huge debt situation, and this is a general situation of overcapacity in industries such as steel.
Also worth noting is, as early as March 28, Northeast special steel released "15 East special steel CP001" declare the default, open the local State-owned enterprises bonds first. The bonds, like toppled dominoes, since then, Northeast special steel subsequent breach of due bonds.
But media reports said, in fact, Northeast special steel bond defaults could have been avoided. Securities times, citing people familiar with the news that, at that time, the underwriter CDB has taken the initiative to communicate with the State-owned assets supervision and controlling shareholder of the issuer, Liaoning province, ready to provide liquidity support, funds and said it was ready to honour, but also willing to package the CDB principal underwriting debt payment provides financial support to the existence of the other. However, officials in Liaoning province, the local Government has not responded.
Dongbei special steel, held on July 20, 2015 diyi、er、sanqi short-term holders of the third meeting, bondholders asked to investigate, Liaoning State-owned assets supervision in the processing of dongbei special steel of defaulted bonds if there are any.
Dongbei special steel many times in bond defaults and the resulting controversy was reported by media, as controlling shareholder of special steel in Liaoning province in Northeast China SASAC and the Liaoning Provincial Government had not been the subject of public voice.
Not the way to approach: "debt-for-equity"
On July 20, dongbei special steel 2015 first issue ultra short-term holders of the third meeting held in Dalian. A participating bank surging told News (www.thepaper.CN), Northeast special steel spokesman said at the meeting, company 70% financial bonds will be settled through debt to equity. Chinese scientists have discovered a dimensional
This statement and online before the provincial Government of Northeast special steel message coordination leading group meeting referred to in the outline of the debt-for-equity scheme. But for this solution, Northeast special steel has not previously negotiated with creditors. During the meeting, creditors to the programme was firmly opposed.
A day earlier, in 2015 the dongbei special steel diyi、er、sanqi short-term holders of the third meeting, Chairman of the Board of Directors of dongbei special steel also said it would swap. Interface, it was reported, which contains specific programmes on three points: first, introduced by the debtor "debt-for-equity scheme"; the second is introducing new investors as soon as possible; the third is to achieve the overall market, to enter the capital market.
Surging above Bank told the news (www.thepaper.CN), Northeast special steel 2015-twice before the first issue ultra short-term bond holders meeting, Northeast special steel attitude is do not respond, but this time directly at the meeting proposed programme 70% financial debt is a debt-for-equity settlement.
The person said, although earlier media reports, also has heard the rumors, but we still find unexpected. However, the specific processes and operational levels of the programme, Northeast special steel gave no details.
Dongbei special steel will take the form of a debt-for-equity problem, when its heads of Mission in an interview did not deny. It said, "in our country there is no law on debt-for-equity-related regulations and policies, eventually took the form of a debt-for-equity problem, it's not hard to say, because, after all, cannot be raised by unilateral, it needs to be a process of consultation of the parties. Now here is also seeking investors to understand and support enterprises since the beginning of March to default, also has been active in this matter. "
It is worth noting that is the end of May, under request of the creditors, Northeast special steel promises "will not carry out a debt-for-equity and not malicious evasion of debts". Now it seems, Northeast special steel has not publicly announced that it will take the form of a debt-for-equity problem, but at least one debt-for-equity has become a choice.
Creditors now firmly opposed the debt-for-equity even hope that the premise of dongbei special steel bankruptcy, Northeast special steel can creditors and debt-for-equity agreement remains to be seen. Even if the two sides can agree on, but as dongbei special steel head of publicity said, currently there is no viable legal provisions and specific policies, the programme cannot be implemented in the short term.
Metallurgical economic development research center Deputy Director Zheng Yuchun previously surging News (www.thepaper.CN) said in an interview after the steel restructuring plan reportedly half the debt through debt settlement, Northeast special steel and now rumors of debt-equity swap. Now the Liaoning Provincial Government, there is nothing, has no large sums of money to replace a dongbei special steel hole, but so big a local enterprise, local authorities cannot shut off, this may be a local government, "no way." They chose "debt-for-equity" form: to lose a drop of blood, a short transition, but this is not a fundamental solution. Also, there is no similar debt-for-equity cases, estimated dongbei special steel and steel was first put forward this proposal, also state whether there is any relevant policies and regulations in the late fall.
With banks surging on the news (www.thepaper.CN), Northeast special steel and creditors are now deadlocked, both programmes are not recognized by the other party, can only wait for the Central Government to the decision.