(Bloomberg) -- A Chinese steelmaker failed to repay a 1 billion yuan ($142 million) bond even after bondholders gave the company more than a month to find the cash.
Shandong-based Xiwang Group Co. didn’t meet the Wednesday repayment deadline for the principal and interest on the bond originally due Oct. 24, the company said in a statement. Bondholders approved the delay earlier this month.
Cross-default clauses were triggered on other yuan bonds from Xiwang Group. Bondholders accepted a proposal to prevent a cross-default clause coming into effect on some of its notes. They did not agree for an exemption on a 800 million yuan bond which consequently came due Thursday.
“Xiwang Group still has room to solve its debt problem and will not move towards bankruptcy liquidation for the time being,” said Shen Chen, a partner at Shanghai Maoliang Investment Management LLP. “There are various modes of debt reorganization, including rollovers, small redemptions with sizeable discounts and some debt-to-equity swaps.”
The company’s credit rating was cut to C from BB by Golden Credit Rating International Co., according to a report dated Nov. 28 by the Chinese local credit assessor.
Shandong province had the highest volumes of onshore defaults in China in the first half of the year.
(Updates with bondholders’ decision to waive cross-default clause in third paragraph)
--With assistance from Tongjian Dong and Xize Kang.
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