China

Angang Steel Company Might Participate in the Restructure of Dongbei Special Steel Group

Summary:

  • Angang Steel Company (000898.SZ) might participate in the restructure of Dongbei Special Steel Group, according to Sina.
  • The Dongbei Special Steel Group is currently holding a debt holders meeting. 

Why It Matters:

  • Dongbei Special Steel Group is a large state-owned company which has defaulted several times this year on debt repayments. The court has required it to undergo a restructuring. According to Sina, the Bank of China is the largest debt holder to the extent of more than RMB 5.6 billion in loans.
  • The Dongbei Special Steel Group is still operating normally. The company borrowed heavily through the economic peak in 2007 and has suffered heavily due to low steel prices since then.
  • Angang Steel might take over the Dalian special steel unit of the Dongbei Special Steel Group. The Angang Steel Company has sent a team of 20 people into the unit for due diligence. However, one obstacle is that Dongbei Special Steel Group is owned by the Liaoning local government, while the Angang Steel Company is directly owned by the central government. Tension between the local and central governments might jeopardize the deal.