China’s Anxin Trust, which is being bailed out by the state after failing to repay billions of RMB to creditors and investors, has unveiled details of a restructuring plan announced last week aimed at restoring its finances and preventing its debt crisis from damaging financial stability, reported Caixin.
The company will raise up to RMB 9 billion ($1.39 billion) by selling shares to Shanghai Di’an Investment Management, a special purpose vehicle set up last week by local state-owned companies and the operator of a state-backed bailout fund for trust companies. On completion of the deal, Shanghai Di’an will hold a controlling stake of 44.44% in the company, it said in a filing to the Shanghai Stock Exchange Friday.
The cash injection marks another step forward in the government’s efforts to defuse a crisis at the listed company following an uncontrolled, debt-fueled expansion and the alleged misappropriation of an estimated RMB 100 billion by its actual controller Gao Tianguo.
The company’s financial performance has deteriorated significantly — it posted a net loss of RMB 6.7 billion in 2020, the company said in May, after reporting a loss of nearly RMB 4 billion in 2019 and RMB 1.8 billion in 2018.