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Local Chinese officials ask Hu An Cable to sell Chinese units
HU An Cable Holdings said on Tuesday the local government of Wuxi City, Guanlin Town in China has proposed that the cable and wire maker sell its three Chinese subsidiaries to one Yixing Jinxiao Copper Industry Co.
The proposal comes in the wake of problems that Hu An Cable has faced recently regarding suppliers and customers in the region.
Hu An Cable in June made a prepayment of 310 million yuan (S$69 million) to Jiangsu Tiandilong Group in Yixing for an order of copper rods, a larger than typical order that Hu An Cable said was in response to the local government's appeal for support of the supplier. But Jiangsu Tiandilong has since been declared bankrupt, and Hu An Cable has made a provision for the prepayment.
On Sept 3, Hu An Cable also announced that it had been notified by 12 customers, who are all subsidiaries of the State Grid Corporation of China, that they would be terminating all payments after the Quality and Technology Supervision Bureau found that certain products made by a Hu An Cable subsidiary did not meet specifications.
The local government proposed the sale of Hu An Cable's subsidiaries in order to help the company overcome its financial and operational difficulties in China, safeguard the livelihoods of employees and protect the interests of shareholders and creditors, Hu An Cable reported.
It said the consideration for the proposed disposal will be based on a valuation of the assets and liabilities of the subsidiaries. Hu An Cable's board is reviewing the terms of the proposed sale and negotiating with the local government and Yixing Jinxiao Copper Industry on the terms.
The proposed buyer is not related to Hu An Cable's directors, controlling shareholder and their associates.
Hu An Cable shares last traded at 0.9 Singapore cent before the announcement.