CEFC Shanghai International Group Ltd, a subsidiary of troubled China CEFC Energy, said on Monday it missed bond payments totalling 2.09 billion yuan ($327.3 million), becoming the latest private Chinese company to default amid a crackdown on financial risk. It is the first time the company has missed bond payments, and follows mounting concern about its ability to service its debts since February, when it was revealed that China CEFC Chairman Ye Jianming was under investigation for suspected economic crimes.
"There have been significant changes to the issuer's production and operations, it has failed to raise funds in the amount required, and it is unable to repay principal and interest on (the bond) in time," the company said in a statement posted on the website of the Shanghai Clearing House. CEFC Shanghai said it planned to make the payments six months after the maturity date
The company "will maintain close communications with investors and relevant intermediaries, and will handle relevant work following the default and continue to disclose its progress," its statement said. The company warned on May 14 that it was uncertain it would be able to make the principal and interest payments on the 270-day super-short-term commercial paper that matured Monday, citing major pressure on operations.
At a recent meeting, bondholders voted overwhelmingly in favour of motions calling on CEFC Shanghai to give details of its finances, and to release a plan for repayment, according to a filing posted last week on the website of the China Foreign Exchange Trade System (CFETS).