SHANGHAI, Jan 13 (Reuters) - China’s state-owned Dalian Machine Tool Group Corp said on Friday that it had cross-defaulted on short-term bills issued last October, after failing to remedy defaults on a separate debt agreement.
Under a cross-default provision, a borrower would be in default on a bond agreement if it cannot honour another obligation.
Dalian made the statement on the website of China’s interbank market, marking the latest in a series of defaults by Chinese companies in industries struggling with overcapacity and weaker demand such as machinery, coal and steel.
On Dec 29, Dalian Machine Tool defaulted on the fourth batch of short-term bills issued in 2015, but was given a grace period of 10 working days to address the issue, so that it can avoid a cross-default.
However, as of Jan 14, the company still had not raised enough money to remedy the defaults, triggering the cross-default, it said in the statement.
Dalian Machine Tool said it would work with the underwriter, Industrial Bank, to work on a solution. ($1=6.9488 Chinese yuan renminbi) (Reporting by Samuel Shen and John Ruwitch; Editing by Greg Mahlich)