What’s new: Zhongrong International Trust Co. Ltd., a subsidiary of Jingwei Textile Machinery Co. Ltd., plans to sell as much as $367 million of bonds through a private placement in Singapore.
The one-year borrowings are intended to raise funds to pay off maturing bonds, the company said. The offshore bonds are being issued through a wholly owned special purpose subsidiary established in the British Virgin Islands by overseas unit Zhongrong International Holdings Ltd.
Jingwei Textile said it would not provide a guarantee for the bonds, but Zhongrong International Trust will provide keepwell support. A keepwell deed is a contract between a parent company and its subsidiary to maintain solvency and financial backing. Zhongrong International Holdings is to provide a guarantee to the issuer or provide other credit enhancement arrangements.
The background: Zhongrong International Trust, founded in 1987, is a financial holding company based in Harbin, the capital of China’s northernmost province Heilongjiang.
Zhongrong was previously majority owned by Chinese investment conglomerate Zhongzhi Enterprise Group. In 2010, Jingwei Textile bought Zhongzhi’s stake in Zhongrong, becoming the trust company’s largest shareholder. Over the years, Jingwei has maintained the role of financial investor without interfering in the trust company’s daily operations.
In 2021, Zhongrong reported revenue of 5.86 billion yuan and profit attributable to the parent of 1.45 billion yuan. As of the end of 2021, the trust company had assets under management of 638.7 billion yuan.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
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