May 29, 2018 / 2:46 AM / 5 months ago

Shanghai Dasheng units default on $14 million loan repayments, stock dives

HONG KONG (Reuters) - Shanghai Dasheng Agriculture Finance Technology Co Ltd. said on Tuesday two of its units had defaulted on loan repayments totaling $14 million, the latest Chinese company to default amid a crackdown on financial risk.

The news sent the stock down 19.8 percent to an all-time low at HK$0.073 in early trade on Tuesday.

It is the latest in a wave of corporate debt defaults amid a government-led campaign to crack down on risky financing, and follows a reminder recently from China’s securities regulator that exchanges should monitor default risks.

China Energy Reserve & Chemicals Group Co said on Monday it failed to repay a $350 million bond that matured earlier this month due to a “tightening in credit conditions”.

Shanghai Dasheng said the Pudong Branch of Bank of Shanghai Co Ltd had filed a claim against its units, Shanghai Dasheng Agricultural Products Co Ltd and Shanghai Dasheng Agro-chemical Co Ltd, for breaching loan agreements amounting to 89.9 million yuan ($14 million), and all related interests.

The company and its controlling shareholder, Shenzhen Dasheng Agricultural Group Co Ltd, which are the guarantors to the loans, were named as defendants in the claim. Hearings are scheduled for June 21.

The petrochemcial products trader said it is seeking legal advice on the proceedings and the impact on its financial position would become clearer after the hearings.

Reporting by Donny Kwok; Editing by Darren Schuettler

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