China Worldbest Bailout Planned
Resource from: CBCC Likes:2971
Dec 12,2005
China Worldbest Group Co. Ltd. (China), one of China's largest state-owned but financially troubled conglomerates, is on track to receive a USD $618 million government bailout package.
Established in 1992, China Worldbest operates through 34 main subsidiaries and dozens of smaller companies it acquired which are involved in textiles, pharmaceuticals, flags, toys, tools, fasteners, pumps, tractors, bearings, and a variety of other products. It is reportedly under control of the Ministry of Textile Industry.
NOTE: Worldbest's ownership and funding relationships are opaque by international standards; the information is from government sources and Worldbest itself, but cannot be evaluated with the same transparency assumptions applied to western corporations.
China Worldbest is involved in the bearing industry in a number of ways through import and export entities, and directly via SCL Bearing (on the web at scl-bearing.com).
Initially involved only in textiles, China Worldbest has grown by acquisition to become a wide-ranging manufacturing and logistics powerhouse across China. The company has also expanded beyond its borders to establish operations in other countries, such as textile manufacturing plants in Mexico and Canada and pharmaceuticals manufacturing in Thailand.
Worldbest is the subject of several investigations by Canadian authorities. In 2001 the company opened a $45 million textile and knitting mill in Drummondville, Quebec, Canada, receiving a wide variety of generous incentives. The plant, which Worldbest promised would employ 360 Canadians, had only 75 employees -- primarily Chinese nationals -- on the roster when it locked the doors in mid-2004, two weeks after employees voted to join a union. Worldbest at first claimed the still-unfinished plant was only down for three months of retooling, but it never reopened.
Company Chairman Zhou Yucheng characterizes Worldbest as, "high-technology, export-oriented, industry-based and transnational," and today it is China's largest textile group and the country's largest pharmaceutical group.
Many believe Worldbest's diversity and lack of financial controls caused its problems, also lacking the skills to operate most of the already-troubled businesses it grew into by acquisition. And because most, if not all, of the state-run companies it has acquired were in very poor condition, those acquisitions have been a severe drag on the core textile operations.
Government finance sources say the bailout is the largest ever of its type in China, and the largest between two state-controlled entities.
The State-Owned Assets and Administration Commission (SAAC) will oversee the government-funded bailout, but which it insists must be referred to as a "market action" and not "bailout."
Government funding to save Worldbest is being funneled via the China Development Bank giving China Chengtong Group more than 5 billion yuan ($618 million). Chengtong is giving the money Worldbest; in exchange, Chengtong take the majority shareholder position and day-to-day operating control. No changes in Worldbest management have been announced, however.
An SAAC spokesman, further obscuring the $618 million funding picture, said, "We are the biggest shareholder of Worldbest rather than the government, so our effort to restructure Worldbest is a market action in a bid to protect our interests."
The President of the U.S. National Council of Textile Organizations said his group strongly objects to the $618 million financing package as a poorly-veiled and illegal government-funded bailout. In a statement, the group said, "This is only the most blatant example of the Chinese government's disregard of free market principles and its WTO commitments."
As of the end of the most recent quarter, China Worldbest had loans of $3.1 billion in arrears vs. total book assets of less than $7 billion. Without the funding package, Worldbest reportedly will experience a fatal cash flow shortfall which could idle its nearly 67,000 employees.
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1.The news above mentioned with detailed source are from internet.We are trying our best to assure they are accurate ,timely and safe so as to let bearing users and sellers read more related info.However, it doesn't mean we agree with any point of view referred in above contents and we are not responsible for the authenticity. If you want to publish the news,please note the source and you will be legally responsible for the news published.
2.All news edited and translated by us are specially noted the source"CBCC".
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