(Yicai Global) Jan. 3 -- Chinese state-owned contractor Zunyi Road and Bridge Construction Group said creditor banks have agreed to a 20-year rollover of loans worth CNY15.6 billion (USD2.3 billion).

Zunyi Road, the largest investment group in Zunyi, Guizhou province, will only pay the interest on the loans in the first 10 years, with the principal repaid in phases over the remaining decade, it said in a stock exchange filing on Dec. 30. The names of the banks were not disclosed.

Annual interest on the loans was adjusted to between 3 percent and 4.5 percent, Zunyi Road added, citing the recent deal. The move will reduce short-term repayment pressure and optimize the firm’s debt structure, it noted.

The debt restructuring does not involve open market bonds, and Zunyi Road will strictly abide by the prospectus terms to repay open market bonds, it said.

Zunyi Road had total outstanding debt of CNY45.8 billion (USD6.6 billion) at the end of last June, equal to 53.3 percent of its total liabilities, of which nearly 31 percent was short-term debt. The builder has defaulted on some debt and faces increased pressure to repay loans in a shorter period.

Zunyi Road’s external debt guarantees amounted to CNY15.1 billion at the end of last year's first half, equal to 18.3 percent of its total assets. Some of those debts have been subject to legal wrangling, increasing the risk to the company of having to pay back money that others borrowed.

Founded in 1993, Zunyi Road is wholly owned by Zunyi city’s state-owned assets supervisor. It had an asset-to-liability ratio of 51 percent last year, with total assets of CNY170.4 billion (USD24.7 billion) and revenue of CNY8.1 billion (USD1.2 billion), according to data from Wind Information.

Editor: Martin Kadiev