Rongsheng Heavy Industries was accused by banks for unpayable loans
Rongsheng Heavy Industries Group Co. Ltd., once the company with largest market capitalization in Mainland companies listed in HKEx, was accused by its largest debtor Bank of China for its unpayable massive loans, Morning Whistle reports.
According to 21 Century Business Herald, the CBRC (China Banking Regulatory Bureau) has accepted related materials filed by BOC and would audit Rongsheng's loans credited by several banks including BOC,China Mingsheng Bank,China Bohai Bank.
Financial reports of Rongsheng show that current liabilities in 2009 reached to 5 billion Yuan, comparing 2008, the company has only 1.4 billion current liabilities.
An anonymous banker exposed that Rongsheng once applied for their credits but refused to provide some information of the company, as they found the company's equity structure is complicated, and many associated companies were set up aside in different taches, they didn't credit the company.
But more banks showed interest, up to September 2011, banks including BOC,CDB(China Developing Bank),Export-Import bank,ABC had granted 163 billion Yuan credit line for Rongsheng.
But as shipbuilding industry began to suffer a slump and excessive production capacity, banks have started to tighten on their credits to the industry, as well as other industries including PV,property development.
At the end of 2011, Rongsheng had only 8.05 billion Yuan left to reach the credit line, comparing the figure 15.75 billion Yuan at the end of 2010.
Now the company is at the edge of bankruptcy, subsidies from Rugao municipal government is also a boondoggle. The government was reported having a honeymoon with Rongsheng. The honeymoon cost the government 859 million Yuan and 1.27 billion Yuan respectively in the year 2010 and 2011, which were more than half of the company's net profit.
But according financial report in Q1, subsidies from government was only 150 million for Q1.
China's shipbuilding industry has been suffering a slump and over-capacity since the beginning of this year, 50 percent of private owned shipbuilding companies were expected to go bankruptcy.