Caixin reported on April 21 that the $1.2-billion bonds Cedar Holdings Group Co. Ltd. acquired from Zhongjiang Trust materially defaulted in March 2022. As a result, two debt-financing state-owned companies filed a lawsuit against the Guangzhou-based conglomerate.

These state-owned companies are Guangzhou Kaide Financial Holdings and Guangzhou Industrial Investment Fund Management.

In November 2018, Cedar Holdings acquired a 71.35% stake in Zhongjiang Trust from the Tomorrow Department, a private capital institution of Xiao Jianhua.

The two Guangzhou state-owned enterprises funded Cedar to complete the acquisition by financing it with 8 billion yuan (1.2 billion dollars).

In March, Cedar failed to pay interest on time, triggering a substantial default.

According to Caixin, Cedar attributed its default to three factors. They are the COVID-19 epidemic’s impact, fluctuations in the real estate market, and poor disposal of related assets.

In February 2022, Cedar Holdings’ debt bubble “exploded,” and many state-owned companies in Guangzhou struggled to pay off their debts.

Caixin showed that with the addition of these two bonds, those companies invested 20 billion yuan (3 billion dollars) in Cedar in total. This amount is a considerable part without collateral.

Caixin cited informed sources, saying that it has been more than a month since the first bond default. However, Cedar has held neither a bondholders’ meeting nor discussed a solution.

As a result, the two state-owned enterprises filed a lawsuit with the Guangzhou Intermediate People’s Court and applied for foreclosure of Cedar’s assets. However, there is nothing left to seize in Cedar now.

As shown on its website, Cedar Holdings, a Fortune Global 500 company, was established in 1997 in Guangzhou. It is a leading Chinese commodity conglomerate with a revenue of over 230 billion yuan (36 billion dollars) in 2021, ranking 359th in the Fortune Global 500 list.

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