Chinese Steel Maker Stops Production

Steel maker FerroChina Thursday became one of the highest-profile Chinese victims yet of the global economic crisis, saying it was unable to service huge debts and was immediately stopping production. It said it could not pay back part of its working capital loans worth 706 million yuan (US$104 million), while warning even larger loans were due soon. "Due to the current economic crisis, the group is unable to repay part of its working capital loans," the company said in a statement filed with the Stock Exchange of Singapore, where it is listed. The announcement came amid rising concerns among Chinese officials and economists that the current global crisis could hurt the local economy and threaten the survival of key exporters. FerroChina added that it had a further 2.03 billion yuan worth of loan facilities and notes, in addition to other working capital loans of 2.49 billion yuan, some of which would be due in the near future. The company, based in east China's Jiangsu province, a major export base, said it was "in active negotiations" with its creditors to explore various options but was not sure if an agreement would be reached. The company temporarily stopped its manufacturing operations in its factories in Jiangsu, it said, adding that it was still pursuing plans, announced last month, of introducing a potential strategic investor. "Given the weak capital market and poor economic conditions, there is no assurance that we can be successful in securing such funding," it said. FerroChina said its shares will remain suspended until further notice. Copyright Agence France-Presse, 2008