DALIAN, China — Private-sector steelmaker Jiangsu Shagang will take Dongbei Special Steel Group under its wing, nearly a year after the state-backed company filed for bankruptcy. An investment firm affiliated with Jiangsu Shagang will acquire a 43% stake in Dongbei Special Steel for 4.46 billion yuan ($680 million). A degree of government influence over Dongbei Special Steel will remain, since Benxi Steel Group, another state-owned steelmaker, will also take an interest worth 1.03 billion yuan. Dongbei Special Steel was established as as a steelmaker affiliated with the Liaoning provincial government. The company’s finances deteriorated as China’s economic growth slowed. It defaulted on its debt nine times last year before finally going belly up in October. The provincial government apparently delayed the bankruptcy process out of concern for its impact on the regional economy. Dongbei Special Steel was known as a leading Chinese “zombie” enterprise that was kept alive even though it was bleeding money. Beijing has pledged to deal with these “zombie” companies, particularly in the steel and coal industries, which are saddled with excess production capacities.
Source :
https://asia.nikkei.com/Business/Companies/Defunct-Dongbei-Special-Steel-to-receive-private-sector-help
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