China’s state-run conglomerate China Merchants Group is in negotiations with financially troubled Dandong Port to take over the debt-laden private entity.
Last week, Dandong Port failed to make a payment of RMB1bn ($150m) on its medium term notes which expired on October 30 due to heavy debt issues and it is facing another six upcoming note payments totalling RMB6.95bn.
In June, China Merchants and the Liaoning government signed a framework agreement to start a new holding company, Liaoning Port Group, to integrate three major ports in Liaoning, Dalian Port, Yingkou Port and Jinzhou Ports.
A source close to Dandong Port told Splash that the port proactively reached out to China Merchants Group to seek investment after China Merchants showed its intention to integrate the ports in Liaoning, however, there hasn’t been any concrete progress made from the negotiations between the two parties.
Dandong Port, controlled by local businessman Wang Wenliang, is one of the few privately owned ports in China. Wang was involved in a bribery scandal in an election of representatives for the National People’s Congress last year, and resigned in August from Rilin Group, the controlling shareholder of the port.
According to the source, Wang has gone missing after the election scandal and a number of banks have stopped extending loans for Dandong Port.
Dandong Port, on the border between China and North Korea, is a major gateway between China and northeast Asia. The port’s third quarter financial report showed that the company had liabilities of RMB46.5bn, including RMB4.8bn of short-term loans due within a year, RMB15.1bn of long-term loans and RMB6bn of outstanding bonds.