FerroChina, a Chinese steel maker, said yesterday that it is unable to repay loans totaling 706 million yuan (US$104 million) because of the "current economic crisis." A further 4.52 billion yuan in loans and notes may also be at risk.
Production at FerroChina's plants has been suspended and the mill is in talks with creditors and potential investors, the company said in a statement to the Singapore stock exchange.
The escalating credit crunch has slowed economic growth, curbing demand for China-made products. Steel prices and demand have been declining.
"The company has been having financing problems for a while," JPMorgan Chase analyst Zhang Qin told Bloomberg News from Hong Kong. "It has been looking for foreign strategic investors for a restructuring."
The company, which has a market value of S$436 million (US$297 million), requested on Tuesday that its shares be suspended from trade. The stock, which last traded at 54.5 Singapore cents, has slumped 70 percent this year.
FerroChina has plants in Changshu City and Changshu Riverside Industrial Park in Jiangsu Province.
(Shanghai Daily October 10, 2008)
