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China prepares new plan for debt restructuring

27 September 2016

The new data came from the financial Internet portal Caixin in China. It is reported that the government of Tianjin city developed a new plan to restructure the debt. In the history of Chinese metallurgical industry is one of the largest events. Means liabilities of the Group Bohai Steel. In 2015, she was ranked ninth on the development of steel in the country. The total cost of production amounted to 192 billion yuan. In dollar terms, the index reached 28,28 billion USD.

Bohai Steel group was founded in 2010. The city authorities encouraged the merger of four major steel companies. Today, the city government offers to isolate from the Group of the most sturdy -. He must belong to the most high-quality assets. The new company will assume responsibility for the debt. Its size is 50 billion yuan. Over time such a «tough nut» will be able to repay the debt. 60 billion yuan will be converted into securities Bohai Steel. In the capital of the company the government intends to invest another 10 billion yuan. Another 80 billion yuan, the city government propose to write off.

According to the Internet portal of the creditors of the Group is occupied with the review of proposed terms of restructuring. In the list of creditors included 105 banks plus nonfinancial company. Shortly before the restructuring plan was different. The city authorities had intended to convert into equity of debt Bohai Steel. Further, the company had to pass under the control of creditors. Part of the debts had to be met from a special Fund. Apparently these proposals did not find support.

In such a situation were and metals trading Group Sinosteel. According to the online portal, the company’s debts amount to 27 billion yuan. In dollar terms, the amount is about 4 billion USD. The debt will be converted into securities. They can be exchanged for shares of the company. Also possible is the exchange for the shares of her «good» units. It is assumed that «-" the government will invest 10 billion yuan. The remaining 33 billion yuan of debts of the company before banks plan to restructure. Their redemption will be at a reduced rate about 3%. Previously, the government acted ha conversion of debt into equity. Now, however, this option does not look optimal.

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