Tsinghua Unigroup Co (清華紫光) yesterday moved to reassure bondholders in the wake of a plunge in its debt that its finances are in good shape.
The company has a key role in building China’s domestic chip industry and gets continuous support from its controling holders for healthy development, its listed unit Unisplendour Corp (紫光) said in a filing to the Shenzhen Stock Exchange.
The group has abundant cash and liquidity, and has not defaulted, the statement said.
Over the past few days, investors dumped dollar debt issued by Tsinghua Unigroup, a subsidiary of Tsinghua University, pushing prices to record lows, amid concern about its finances as well as the strength of state support.
Tsinghua’s bonds made a slight recovery after its executives on Friday last week said that the firm has more than 17 billion yuan (US$2.43 billion) of cash in the offshore market, as well as credit lines of 250 billion yuan.
Yesterday, the company’s bonds maturing in 2021 and 2023 were both largely steady.
Tsinghua Holdings Corp (清華控股) has no plan for further stake changes in Tsinghua Unigroup, Unisplendour said.
Tsinghua Holdings, the parent company with a 51 percent holding, last year sought to sell a 36 percent stake to a local government investment arm in Shenzhen. However, the company in August said that it has canceled the plan.
Tsinghua Unigroup’s debt-to-asset ratio last year increased to 73.42 percent, from 62.09 percent in 2017 and 59.09 percent in 2016, after it went on a borrowing spree to finance takeovers and other investments to improve its position in the chip industry.
Tsinghua Unigroup is an indirect controling holder of Unisplendour Corp and an affiliate of Unigroup Guoxin Microelectronics Co (紫光國芯).
Shares in Unisplendour on Wednesday dropped 4 percent, while Unigroup Guoxin fell by the 10 percent daily limit, in Shanghai trading.
Yesterday morning, both stocks were trading up by at least 0.9 percent.
Earlier last week, Founder Group (北大方正集團) — backed by Peking University — also saw a bond sell-off amid concern about its finances.
The firm has posted “big” losses in the past three years as its core business in the IT sector faces fierce competition and its pharmaceutical business also has low profitability.
Yesterday, its dollar note due 2023 remained near a record low in Shanghai trading, despite having secured a commitment from China Cinda Asset Management Co (中國信達資產管理) for 8 billion yuan in loans backed by assets.
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