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Wison Unit Asked for Loan Repayment From Agricultural Bank

PetroChina Co. supplier Wison Engineering Services Co. said a state bank asked one of its units to repay loans of about 10 percent of total borrowings, amid a corruption probe centered on the nation’s oil industry.

Agricultural Bank of China Ltd., the nation’s third-biggest by market value, requested Wison Engineering Ltd. repay 186 million yuan ($30.4 million) and interest, according to a filing by Wison to the Hong Kong stock exchange today. Repayments on the group’s borrowings are up to date, it said.

Wison’s shares have been suspended since Sept. 2 and the company and its chairman Hua Bangsong are assisting authorities in unspecified investigations, the company said at the time. China is also investigating PetroChina’s former Chairman Jiang Jiemin and four of its senior executives for graft, and Wison’s relationship with the nation’s largest oil producer has drawn scrutiny. PetroChina was Wison’s biggest customer before 2012.

Wison “has not breached any term of the relevant borrowing agreements relating to the ABC loans,” it said in the statement. “The two parties are currently engaged in dialogue, seeking a mutually-acceptable solution.”

An e-mail and two calls to Agricultural Bank’s press office in Beijing went unanswered.

Interest Payments

Wison had 2.06 billion yuan of interest-bearing borrowings at the end of the first half of this year, according to its interim report. Of these, 270 million yuan were short-term loans repayable within three months, and 1.4 billion yuan were loans repayable over three to 12 months.

The company paid 4.60 percent to 6.89 percent as interest in the period ended June 30, 2013, according to the statement. It didn’t name its lenders.

Revenue in the six months more than doubled to 2 billion yuan from a year ago, while profit jumped 15 times to 34.2 million yuan. The increases are mainly due to the “smooth progress of projects” and the fact that “a number of projects have entered into the principal construction phase,” Wison said in a statement to the Hong Kong stock exchange on Aug. 20.

Regulators questioned Wison about “certain projects,” took records and froze bank accounts, the company said on Sept. 19.

PetroChina Contracts

PetroChina contracts added 111 million yuan, or 5.6 percent of the total, to Wison sales in the first half of 2013, according to a statement on Sept. 13. Outstanding business with PetroChina is worth 204 million yuan, it said.

In its 2012 share sale document, Wison said it had a nine-year relationship with PetroChina. In the three years to 2011, its revenue from PetroChina and its subsidiaries amounted to 63 percent, 80 percent and 58 percent of sales, according to the document.

Wison completed construction of the PetroChina Sichuan Integrated Refinery and Petrochemical Complex in December 2012, according to its annual report that year. It was Wison’s largest contract in terms of revenue recognized, and marked its first project to build an integrated aromatics unit, the main unit of a refinery, Wison said in the statement.

PetroChina shares fell 4.4 percent in Hong Kong, the most in two years, on Aug. 28, after the four senior managers were removed. Former chairman Jiang was dismissed from his post as head of the state assets regulator and is under investigation, the official Xinhua News Agency said Sept. 2.

Tackle Graft

China’s new leaders have pledged to tackle graft, which President Xi Jinping has said threatens the communist party’s 64-year grip on power.

The South China Morning Post reported Aug. 30 that Zhou Yongkang, a party member with ties to the oil industry and until last year head of China’s security services, was the target of a corruption probe.

Xi’s anti-corruption campaign has focused on people with links to Zhou, who was a supporter of Bo Xilai, the ousted Politburo member sentenced earlier this week to life in prison for corruption. Former chairman Jiang and Zhou were top oil executives who served together at an oilfield in eastern China from 1989-90, according to their official biographies. Jiang was also chairman of PetroChina’s parent China National Petroleum Corp. until earlier this year and Zhou led the company in the 1990s as general manager.

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