China energy firm CEFC defaults despite state takeover
SHANGHAI (Bloomberg) -- As corporate defaults pile up in China’s onshore bond market, a unit of a once-promising energy conglomerate with $4.8 billion of debt and a checkered past said it won’t be able to meet its payment obligation Monday.
CEFC Shanghai International Group, a unit of the privately-held CEFC China Energy Co., failed to repay 2 billion yuan ($313 million) of bonds but said it will seek to pay back the notes in six months, according to a statement on the Shanghai Clearing House website. The unit said a week ago it may not be able to repay the notes because its chairman’s failure to “fulfill normal responsibilities” had a huge impact on the company’s operations.
Worries among investors about surging default rates in China are deepening after at least four nonpayments in the onshore market over the past month. Given the magnitude of the CEFC’s debt load, market stability will hinge on how it implements a debt workout plan, according to Fitch Ratings.
CEFC’s rise and fall mirrors some of China’s other sprawling, acquisitive private companies under pressure by President Xi Jinping’s crackdown on risky loans and capital outflows. The firm’s rapid ascent peaked with its agreement in September to buy a $9 billion stake in Russian oil behemoth Rosneft. That deal fell apart this month as financial troubles emerged after its chairman, Ye Jianming, came under investigation by Chinese authorities and stepped down from management.
The company relied heavily on bond sales for funding over the past two years and its borrowing costs have jumped since Ye was put under investigation, shutting it out from funding in this market. Two calls each to CEFC Shanghai representatives and the general line of its parent company went unanswered.
http://www.worldoil.com/news/2018/5/21/china-energy-firm-cefc-defaults-after-rosneft-deal-fails
Chinese investments within Czech Republic in jeopardy
The Central European Investment Group J&T, based in the Czech Republic, has cut ties with Chinese investment group
CEFC, meaning that the Chinese company will no longer have control over European-based activities in Prague.
CEFC China Energy Ltd, China’s seventh biggest private company, is based in Shanghai and was founded by Ye Jianming in 2002 (who then went onto become an advisor to the Czech President). The enterprise focuses on energy-orientated investments and economic growth.
It has been reported by
Radio Praha that CEFC had held assets in Czech Republic’s energy sector as well as investments in breweries, hotels, tv broadcasters and football club Slavia Prague. They even had a 9.9% hold in J&T and it has been claimed there were hopes to grow that to over 50% shareholding.
The agreements have since come tumbling down amidst a series of setbacks from the Chinese partners. As well as displaying support for Tibet – a country which China does currently not recognise – the Czech Republic brought into question human rights issues relating to China. From there however the Chinese firm at the heart of the recent developments failed to provide the Czech National Bank with all the required documentation, and has also been accused of not paying a debt of 11.5 billion Czech crowns and the deal has now been withdrawn.
The setbacks to the partnership will see J&T attempt to withdraw CEFC’s board nominees from the European branch. CEFC however has stated that it will undergo all the legal steps to prevent new board members being elected and hopes to protect all of its Czech assets. At this point, it is unclear if the partnership can be salvaged however it has been revealed that J&T is happy to enter into talks with the state company, CITIC, that hold nearly half of the shares in CEFC.
https://150sec.com/cefc-jt/
