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Huarong takes over D'long assets
By Chuan Yu (China Daily)
Updated: 2004-09-01 09:38
A State-owned asset management company has taken over assets of the nearly collapsed D'Long International Strategic Investment Co Ltd, a controversial private company that has equity stakes in many listed firms, sources said yesterday.
China Huarong Asset Management Corporation signed agreements last week with D'Long International and two of its major subsidiaries - Xinjiang D'Long (Group) Co Ltd and Tunhe Group - to take the three firms' assets into custody "irrevocably."
According to the agreements, Huarong will be responsible for making key business decisions for the three firms, and will independently dispose of the assets in custody in any legal method such as transfer, lease, restructuring and bankruptcy.
The move has ended months of market speculation about who will take up the challenge of taking over D'Long, which analysts say has many quality assets although its funding chain has broken up. International investors were among those tipped as potential candidates for the takeover.
"This is a win-win deal for D'Long, its creditor banks and other investors," said Wang Yuanhong, a senior analyst with the State Information Centre. "Many of the firm's core assets are of high quality. It simply needs fresh liquidity."
China Huarong, which was set up five years ago to take over a huge chunk of bad assets from China's largest State-owned commercial bank, has close ties with the banking sector.
Wang said he expected additional infusions of funding from creditors' banks, which will subsequently bolster prices as D'Long continues to sell assets to pay back debts.
Huarong declined yesterday to say how it will dispose of the assets it has just taken over, but said it will "fully respect" the wishes of the three companies to give priority to individual creditors of its non-bank financial institutions when paying back debts with cash recovered.
D'Long International, which once owned equity stakes in more than 170 listed companies, was once a paradigm of China's successful private business. But its complicated capital manoeuvres finally led to a breakdown in its funding chain, and creditor banks are demanding repayments.
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