Xiamen Xiangyu says state-owned parent to shield it from Jiangsu Delong difficulties
BEIJING, July 29 (Reuters) -Commodities firm Xiamen Xiangyu Co 600057.SS said on Monday its state-owned parent plans to acquire its claims against Jiangsu Delong, China's third-largest stainless steel producer, which could face court-ordered bankruptcy reorganisation.
Jiangsu Delong Nickel Industry was among a wave of Chinese firms that have invested billions of dollars between them in smelting plants in Indonesia, but has been hard hit by an industry downturn.
Last Wednesday, a Chinese court said it was seeking administrators in the event that it accepts a petition from creditors for bankruptcy and reorganisation proceedings to be initiated against Jiangsu Delong and three related companies.
Xiamen Xiangyu, which trades and ships commodities, did not give a value for its claims against Delong.
"In order to protect the interests of the listed company and its investors, Xiangyu Group intends to acquire the company's creditor's rights against Jiangsu Delong and its subsidiaries as a whole," the company said in a Shanghai stock exchange filing.
Jiangsu Delong could not immediately be reached for comment.
Xiamen Xiangyu borrowed more than 6.8 billion yuan ($937 million) from banks for a 2.5 million-ton stainless steel joint venture in Indonesia with Jiangsu Delong, according to a late 2019 posting on its website.
Shares in Xiamen Xiangyu fell 3.6% on Monday and have lost nearly 17% since last Tuesday's close.
Xiamen Xiangyu said Jiangsu Delong and the other three companies that creditors have sought to take action against are "currently under government supervision and are still operating normally, as far as Xiangyu Group understands from various channels."
As more smelters have swung into operation and demand weakened, stainless steel prices SHSScv1 have slid, down 17% since the start of 2023 while prices for nickel SNIc1 have tumbled 45%.
Jiangsu Delong stakes worth more than two billion yuan in subsidiaries have been frozen since July 2 by courts in Shanghai and Xiamen, company information provider Qichacha showed.
($1 = 7.2556 yuan)
Reporting by Amy Lv, Siyi Liu and Tony Munroe; Editing by Edwina Gibbs
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