Economic review

Tianjin halts land sale meant to pay debts of Bohai Steel unit

2018-05-16 10:29:00 (Beijing Time)         Global Times/Agencies

0

Authorities in Tianjin, a port city in North China, have ordered a court to freeze a land auction planned by a creditor of a former unit of the debt-stricken Bohai Steel Group, according to three sources and documents viewed by Reuters.

Bohai Steel and its units have been undergoing a State-backed debt restructuring program since 2016 as the conglomerate struggles with liabilities of around 192 billion yuan ($30.26 billion) in one of the most high-profile failures of a State-owned enterprise in years.

The land up for auction, valued at 238 million yuan, had been seized by National Trust, a creditor of the asset's owner, Tianjin Metallurgy Steel Wire and Cable Group, a unit of Tianjin Metallurgy Group that defaulted on a trust loan, according to three sources with knowledge of the matter.

Tianjin Metallurgy Group was a subsidiary of Bohai Steel before it was spun off in 2016 under the Tianjin government-directed rescue plan for the indebted conglomerate.

The land sale suspension would raise questions over the local government's commitment to disposing of assets owned by failing State-owned enterprises.

In a letter dated May 10 sent by Tianjin's land resources bureau to Tianjin No.1 Intermediate Court and viewed by Reuters, the bureau "demanded" that the court halt the auction, citing the expiration of a land license.

The Tianjin municipal government and Tianjin Metallurgy Group didn't immediately respond to faxed requests seeking comment.