Chinese cement company says to default on debt

Shandong Shanshui, the wholly owned subsidiary of Hong Kong-listed cement company China Shanshui, would default on its debts, according to a statement from the parent company.

China Shanshui Cement Group Ltd, headquartered in Jinan, capital of east China's Shandong Province, has an annual cement production capacity of more than 100 million tonnes.

On November 5, China Shanshui said in a disclosure on the Hong Kong Stock Exchange that there remained uncertainty as to whether Shandong Shanshui can repay a 2 billion yuan onshore debt on 12 November 2015.

China Shanshui said on Wednesday that, having explored all options reasonably available, its board had concluded that it would be unable to obtain sufficient financing on or before 12 November 2015 to repay the debt and it is therefore certain of the default.

The default will trigger cross default provisions of other financial facilities entered into by China Shanshui, said the parent company.

China Shanshui's board had resolved to file a petition and an application for the appointment of provisional liquidators with the Grand Court of the Cayman Islands, where the company is incorporated.

China Shanshui witnessed a loss in net profit for the six months in 2015. The company attributes the loss to the slowing down in economic growth in regions where it operates.

The company said it has been extensively seeking financing options since June 2015.

However, all the banks and other financial institutions that the company has contacted have expressed their concern in relation to the uncertainty of the management of the company and the impact that it may have on the business and financial prospects, China Shanshui said.