March 29, 2014 / 5:41 AM / 4 years ago

PetroChina supplier Wison says unsure about staying in business

HONG KONG, March 29 (Reuters) - Shanghai-based Wison Engineering Services Co Ltd, a PetroChina supplier which earlier said its chairman had been arrested for alleged bribery, has reported a hefty loss for 2013 and expressed uncertainty about whether it can remain in business.

In its 2013 earnings report released on Friday night, Hong Kong-listed Wison said its business was hurt after Chinese authorities last year launched a corruption probe into its chairman and founder Hua Bangsong.

Wison said authorities took away some company books and records while banks are pushing it for immediate repayment of loans, which “indicate the existence of material uncertainties which cast significant doubt about the Group’s ability to continue as a going concern.”

Shares in Wison have been suspended in Hong Kong since early September, when the company said that Hua was helping authorities with an investigation. On March 10, Wison confirmed Hua had been arrested for “alleged bribery activity”.

Wison, which has derived most of its revenue from PetroChina in recent years, posted a loss of 514 million yuan ($82.74 million)for last year versus a net profit of 534 million yuan in 2012. It attributed the loss in part to the delay of a major project originally scheduled for launch last year.

The company said it was seeking to bring in strategic investors and was in talks with creditors to defer repayment of loans. The statement said it defaulted on a 250 million yuan loan late last year and banks wanted immediate repayment of 1.3 billion yuan in loans.

Last September, Wison said that Hua was assisting Chinese authorities in an investigation. In late August, the Chinese government announced a probe involving oil giant PetroChina and its parent, China National Petroleum Corp (CNPC). That announcement followed a pledge by President Xi Jinping to crack down on corruption in China, which he said threatened the Communist Party’s survival.

After Chinese authorities announced their probe, shares of Wison fell about 30 percent. Authorities haven’t made any subsequent announcement about the probe.

On Friday, Wison said “We have been unable to obtain further information regarding the nature, scope and status of the investigation and ascertain whether such investigation will have any significant impact on the Group’s financial position.”

According to Wison filings with the Hong Kong stock exchange, Hua founded the company in 1997 and built it into China’s largest private petrochemical contractor thanks largely to revenue from PetroChina, one of the world’s most valuable energy firms.

On Friday, Wison said it remained hopeful about its prospects as it has a backlog of coal-to-chemicals, petrochemical and refining projects. ($1 = 6.2122 Chinese yuan) (Reporting by Charlie Zhu; Editing by Richard Borsuk)

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