Indebted Chinese firms issue stock to pay loans
Move lets banks shore up balance sheets but may make them reluctant to shut down firms
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Hong Kong
A NEW approach to managing China's corporate debt burden may offer temporary relief for banks but spell further difficulties for the country's economy: having deeply troubled companies use stock to pay overdue loans.
Early evidence of the strategy emerged late on Thursday, when a heavily indebted Chinese shipbuilder disclosed that it would issue equity to its creditors, instead of repaying US$2.17 billion in bank loans.
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