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December 10, 2016

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Home » Business » Economy

SOEs ease strain with debt swap deals

THREE Chinese state-owned enterprises yesterday signed debt-to-equity swap contracts with domestic banks to ease their financial burdens, with an analyst saying that conversion of debt to equity would be the mode for SOEs to take.

Sinosteel Corp, a steel making and resources trading company, signed its debt restructuring and debt-to-equity swap contracts with six banks, including Bank of China and China Development Bank. It owes more than 60 billion yuan (US$8.7 billion) in debts to 44 financial institutions, of which 30 billion yuan will be converted into stocks.

Shanghai-listed Shandong Gold Group Co signed a contract with Industrial and Commercial Bank of China to convert its 10 billion yuan of debts into equity, while Shanxi Coking Coal Group’s debt-to-equity contract was with China Construction Bank and Shanxi State-owned Assets Supervision and Administration Commission.

Debt-to-equity swap “would be the main approach for SOEs to deal with short-term debts,” said Lu Zhengwei, chief economist of Industrial Bank.


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