Shandong Shanshui Says Bond Payment Unlikely as Dispute DeepensBloomberg News
Company says fight for control has sparked cash shortage
Almost 1.9 billion yuan of bond principal and interest is due
Shandong Shanshui Cement Group Ltd., the main operating arm of China Shanshui Cement Group Ltd., said it’s unlikely to make payment on a three-year yuan bond due Jan. 21 amid a cash shortage and escalating management dispute that threaten more defaults.
The company is due to repay almost 1.9 billion yuan ($290 million) of bond principal and interest, according to a statement Thursday. The announcement comes days after its parent, China Shanshui, filed legal actions against Shandong Shanshui’s former directors. They have also filed suit this month, alleging that China Shanshui released "false and illegal statements."
"The root reason for Shandong Shanshui debt issues is the unresolved fight for control for the company, the company’s financing has consequently been limited," the operating unit said in the statement. China Shanshui’s main shareholders, including Tianrui Group and Asia Cement, have said they have enough capital to help resolve Shandong Shanshui’s problems, according to the statement.
The lawsuit by China Shanshui’s operating unit comes as new bosses, backed by biggest shareholder Tianrui Group Co., seek to wrest control of China Shanshui’s operations from founder Zhang Caikui. China Shanshui said last week that it would buy back the $500 million of outstanding notes by Jan. 19 and pay the principal of 2 billion yuan of onshore bonds that defaulted in November.
— With assistance by Clement Tan