Debt-to-equity Swap Brings Economic Results to Steel FirmXingang Steel, a new steel firms established last year through debt-to-equity, earned a profit of 10.06 million yuan in the same year, with its business volume exceeding 11.3 billion yuan.Li Xiaopeng, vice-president of Xingang Steel, a subsidiary of the Beijing-based Capital Iron and Steel (CIS), one of China's largest steel firms, reported the achievement to the restructured company's first shareholder meeting and board meeting Wednesday. The company, with a registered capital of 7.7 billion yuan, is jointly owned by CIS, Huarong Asset Management Corporation (HAMC) and another two asset management firms. CIS holds an 50 plus percent share while Huarong owns a 39 percent stake. Li, also HAMC's vice-president, said, "after the reshuffle, the Xingang Steel has a diversified ownership and the decision-making mechanism has changed from individual to the board of directors, which are required by a modern enterprise." According to its year 2000 preliminary plan on profit allocation and equity repurchase, HAMC can retrieve equity of 44. 54 million yuan and receive a dividend totaling 1.54 million yuan. By the year 2000, China's four state asset management corporations (AMC), including HAMC, had purchased non-performing loans (NPLs) of 1.3 trillion yuan from state-owned commercial banks, and HAMC's assets led the other three to hit 407.7 billion yuan, with more than 70,000 debtors. By 2000, HAMC had wiped out 7.86 billion yuan of assets, and retrieved capital totaling 3.28 billion yuan, including two billion yuan in cash. According to related regulations, the four AMCs are allowed to dispose of NPLs by various means and provide consultation, acquisition and listing services for its debtors, and can apply for liquidation for enterprises that must be closed down. They are also able to sell their shareholding rights and equities to both domestic and foreign investors to maximize the retrieved amount of state assets and guard against financial risks. |
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