Zhongrong International Trust Defers Payment for Two Financial Products in Yunnan
Xia Xinyu
DATE:  Jan 15 2018
/ SOURCE:  Yicai
Zhongrong International Trust Defers Payment for Two Financial Products in Yunnan Zhongrong International Trust Defers Payment for Two Financial Products in Yunnan

(Yicai Global) Jan.15 -- Lending money to State-owned Assets Supervision and Administration Commission-affiliated enterprises is supposed to be risk-free, but it is not the case anymore.

The "Zhongrong Jiarun No. 31 Collective Trust Plan," a trust loan project, will be deferred as the borrower failed to repay all the principal and interest of the trust loan on time, Zhongrong International Trust Co. said in a letter to investors on Jan. 11.

The borrower is Yunnan State-owned Capital Operation Co., a wholly-owned holding enterprise of Yunnan SASAC. As of the end of the third quarter of 2017, the company was also the largest shareholder of Yunnan Yunwei Company [SHA:600725] with a 23.26 percent stake.

The subsidiary of Yunnan State-owned Capital Operation Co. raised funds of CNY700 million (USD108 million) with 24 months term through another ZRT product, in which Yunnan Capital took irrevocable warranty responsibility. In other words, Yunnan Capital and its subsidiary raised a total of CNY1.5 billion, which should have been paid off in principal and interest by Dec. 15, 2017.

Yunnan Capital has paid CNY600 million for the two trust plans up until now, and the company still owes less than CNY1 billion in principal and interest, people familiar with the matter and from ZRT told Yicai Global.

Yunnan Capital is a provincial state-owned company engaged in equity investment business approved by the provincial people's government in August 2011, with the registered capital of CNY8.3 billion, the company website shows. However, the industry regulator says its registered capital is CNY10.3 billion, wholly provided by the local SASAC.

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Keywords:   Zhongrong International Trust Co.