Chinese industry and investment conglomerate Peking University Founder Group is facing “extremely tight” cash flow after missing a bond payment and is seeking strategic investors for a restructuring, the company said, reported Caixin.
Founder, which is 70% owned by Peking University, rocked the market Monday by failing to repay a 270-day, RMB 2 billion ($285 million) bond. Founder’s default underscored financial strains squeezing Chinese businesses amid slowing economic growth. About 45 companies defaulted on 120 bonds involving RMB 102.9 billion as of mid-October, Bloomberg data shows.
The default also escalates concerns about the weak finances of debt-laden business arms of Chinese universities. The company and Tsinghua Unigroup, a top chipmaker run by archrival Tsinghua University, have been under the spotlight in recent months following a tumble in their dollar bonds.
Founder’s trouble surprised the market as the company’s latest financial report showed that it had net assets exceeding RMB 60 billion, including RMB 45 billion in cash as of the end of September.