Huarong to Consider $10.9 Billion Bond Issue to Raise Cash

(Bloomberg) -- Shareholders of China Huarong Asset Management Co. are set to consider a proposal for the firm to issue as much as 70 billion yuan ($10.9 billlion) of bonds to “further enhance the liquidity management of the company.”

The potential debt offering in the domestic bond market may be through a public or targeted issuance and will be subject to approval at Huarong’s upcoming Annual General Meeting scheduled for Oct. 21, as well as by local regulatory authorities. The supplementary resolution was disclosed in a Hong Kong stock exchange filing late Thursday. 

China’s biggest bad debt manager roiled markets after delaying its earnings report in March. Huarong’s shares have been suspended since April, but its local-currency and dollar-denominated notes have risen since details of a state-led bailout were disclosed in August.    

The proposed bonds will have a term of no more than 10 years, and may be sold as “one issuance or multiple batches of issuance,” according to Huarong’s filing. 

Proceeds of the potential move will be used to “increase the source of working capital, optimize the structure of assets and liabilities and promote business development as well as other purposes recognized by competent authorities,” the filing said. The firm announced in September that it is marketing 380 billion yuan in bad assets for sale to help shore up its finances.   

In August, Huarong secured a rescue package from some of the nation’s biggest financial firms, including state-owned conglomerate Citic Group, and after a long delay revealed a record loss of 102.9 billion yuan for 2020, slashing shareholder equity by nearly 85% at the time.

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