December 12, 2016 / 2:53 AM / 8 months ago

Shareholder to make interest payment after China City Constructions defaults

2 Min Read

SHANGHAI, Dec 12 (Reuters) - China City Construction Holdings Group said late on Friday that one of its shareholders had stepped in to pay interest on a local bond upon which the construction company defaulted last week.

China City Construction Holdings Group, the unlisted Hong Kong subsidiary of a mainland Chinese construction and development, firm said in a statement earlier on Friday that it could not make an interest payment December 9 on a five-year bond.

It later issued another statement saying that Beijing MIC investment Co., which owns a 51 percent stake in China City Construction, would be willing to support the firm and make the payment.

"The company has been affected by factors including downgrading. Its ability to finance is limited, and it is not able to make interest payments," China City Construction said in the statement posted on the China Central Depository & Clearing Co's website.

"But the company's shareholder Beijing MIC Investment already has enough capital to pay," it added.

China City Construction said it would make additional efforts to raise funds to pay off the principal and further interest.

The bond's principal is 1.55 billion yuan ($224.20 million) and it carries an interest rate of 5.68 percent.

Liquidity pressure is mounting on China City Construction, which had difficulty in making on-time interest payments on another set of medium-term notes in November.

Its troubles date back to April, when it first ran into trouble after a change in ownership in its Chinese parent company, China City Construction Holding Group Co, triggered an early redemption clause for the 2.5 billion yuan ($376.51 million) offshore yuan bond maturing in 2017. ($1 = 6.9135 Chinese yuan renminbi) (Reporting By Winni Zhou and Brenda Goh; Editing by Eric Meijer)

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