April 19, 2018 / 2:12 PM / a month ago

China's CITIC and Czech-based CEFC Europe to form joint venture

PRAGUE, April 19 (Reuters) - State-run Chinese conglomerate CITIC and CEFC Europe, the Czech-based unit of China’s CEFC, have signed a memorandum of understanding to establish a joint venture, the Czech president’s spokesman said.

A CITIC delegation, including its chairman, met Czech President Milos Zeman on Wednesday, amid reports it would join forces with CEFC Europe as CEFC comes under pressure.

Zeman is pursuing closer economic ties with China, and CEFC has been a top Chinese investor in the central European country.

But CEFC has been under strain since it was revealed that Chairman Ye Jianming had been investigated for suspected economic crimes earlier this year in China.

The company has run up debts and was borrowing at double-digit interest rates to shore up its financial position.

In the planned joint venture, CEFC Europe would hold 51 percent and CITIC the rest, Zeman’s spokesman Jiri Ovcacek said, confirming a report by CTK news agency.

The joint venture would take over CEFC’s assets in the Czech Republic. It has stakes in Czech brewery group Lobkowicz, Prague soccer club Slavia Praha, the national airline, hotels and real estate.

CEFC Europe declined to comment.

CEFC dropped plans last month to raise its stake in Prague-based J&T financial group, a bank and investment vehicle, to 50 percent from 9.9 percent. (Reporting by Jason Hovet and Robert Muller; Editing by Mark Potter)

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