(Yicai Global) July 11 -- Dongbei Special Steel Group Co. submitted a draft reorganization plan regarding its keenly-followed bankruptcy case to Dalian Intermediate People's Court yesterday, reported state-run Xinhua News Agency.
Two leading steel companies -- one private and one state-owned, will take part in the reorganization of Dongbei Special Steel, which is in the process of carrying out a mixed ownership reform via reorganization, Xinhua quoted Xu Jisheng, deputy director of the State-Owned Assets Supervision and Administration Commission (SASAC) of Liaoning province, as saying. Liaoning province's SASAC is an investor in Dongbei Special Steel.
Under the relevant law, July 10 was the deadline for Dongbei Special Steel to submit its draft reorganization plan. The deadline has been extended twice before as the steelmaker was unable to produce one.
Dongbei Special Steel's management team, which includes Liaoning province's SASAC, has been in close contact with potential investors and had many rounds of talks with major creditors and potential investors on reorganization and investment plans since its bankruptcy process started. By making the process known to all major creditors, the management team has pinned down the company's current investors. Dongbei Special Steel has been operating normally since it entered bankruptcy, said Xu.
Meanwhile, Jiangsu Shagang Co. [SHE:002075] and Bengang Steel Plates Co. [SHE:000761] made separate statements yesterday, saying that they will take part in Dongbei Special Steel's reorganization process. A company owned by Shen Wenrong, the actual controller of Jiangsu Shagang, is likely to become the largest shareholder of Dongbei Special Steel after its reorganization has been completed, the statement said.
As a leading state-owned special steel producer, Dongbei Special Steel has been under a huge debt burden and high financing costs. The company has defaulted on a number of bonds since March last year, leading to a debt crisis. On Oct. 10, 2016, Dalian Intermediate People's Court ruled that Dongbei Special Steel and its two affiliates enter bankruptcy and reorganization process and appointed their managers during the process.