Shenzhen-listed Sainty Marine has defaulted on a CNY63 million (USD10 million) bill of exchange drawn for Nantong Mingde Heavy Industry (NMHI), which the company is seeking to take over.
Sainty Marine could not accept the bill of exchange, which was due on 3 May, as it faced tight liquidity recently, a stock filing of Sainty Marine said on 6 May.
The bill of exchange, which was drawn on 3 November 2014, had been put up as security by NMHI to raise CNY50 million from Jiangsu Zhangjiagang Rural Commercial Bank, Sainty Marine said.
The company is actively communicating with the bank to tackle the default on the bill of exchange.
As of end of 2014, Sainty Marine provided NMHI with a net total of CNY2.5 billion for the building costs of vessels under construction at the Nantong yard, making Sainty Marine the single-largest creditor of the Nantong yard.
The Nantong yard has entered into court receivership since Sainty Marine applied for the bankruptcy restructuring of NMHI in December 2014.
In addition, assets worth CNY300 million owned by the company and its three related individuals have been seized by Nanjing City Intermediate People’s Court.
The asset freeze was requested by Jiangsu Bank over a loan dispute with Sainty Marine.
In September 2014, the company borrowed CNY300 million due September 2015 from the bank to finance a private placement. However, the company failed to meet the schedule to complete the private placement by end of March this year.