CXO (ASX) Darwin Port Owner In Debt

Originally posted by OMEGA MAN ↑

Chinese buyer of Darwin Port struggles to pay interest and heavily in debt
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https://stopforeignownershipinaustr...truggles-to-pay-interest-and-heavily-in-debt/

The new Chinese owner of Darwin Port is heavily indebted and has struggled to make interest payments on money borrowed to buy the lease, raising doubts over promises to upgrade the port and fund a new $200 million hotel on a nearby site.An analysis of the finances of the Landbridge Group and its billionaire founder Ye Cheng shows he does not fit the stereotype of a cashed-up Chinese billionaire with access to cheap funding from state-owned banks.

Rather, Landbridge’s local accounts and documents lodged in China show an over-extended company scrambling from one loan repayment to the next and paying up to 12 per cent interest on some borrowings.

The company is equally exposed to refinancing risks in China’s volatile debts markets, where it has been forced to scrap four bond issues in the last two years.

An analysis of the finances of the Landbridge Group and its billionaire founder Ye Cheng shows he does not fit the stereotype of a cashed-up Chinese billionaire with access to cheap funding from state-owned banks.

Landbridge’s funding challenges became more acute on Tuesday when it failed to sell a 20 per cent stake in the Darwin Port to an Australian entity, as prescribed in the original sale agreement with the Northern Territory government

This leaves the company without a timely cash injection and raises doubts over whether any local party could make the numbers work at Landbridge’s $506 million purchase price. The Northern Territory will retain a 20 per cent legal interest in the port, but hold no economic interest.

Strategic aims
In an effort to overcome its funding challenges Landbridge has sought to link its port projects in Darwin and Panama with Beijing’s larger strategic aims in the hope of securing cheaper financing from the state.

It is known to have sought a $500 million loan from the Export-Import Bank of China (Exim), a state-backed policy bank which sits under the country’s cabinet. Exim’s mission is to support “China’s foreign trade, investment and international economic cooperation”, according to its website.

In an effort to overcome its funding challenges Landbridge has sought to link its port projects in Darwin and Panama with Beijing’s larger strategic aims in the hope of securing cheaper financing from the state.

Mike Hughes, the vice-president of Landbridge Australia, would not say if the loan with Exim or another lender had been agreed, while stressing the port was purchased during a low period in the cycle and future earnings were expected to increase strongly.

He said this would be driven by a pick-up in oil and gas volumes and the resumption of manganese exports, while Landbridge was working towards making Darwin an export hub for Asia.

“We are on-track building Darwin’s future as an export gateway to Asia,” he said.

Any new funding agreement from Exim would go some way to ease Landbridge’s financial issues and, contrary to speculation, would not trigger an automatic review by the Foreign Investment Review Board.

A spokesperson for Treasurer Scott Morrison said a clause in the agreement allowed the Northern Territory government to terminate the lease in the event of a loan default.

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this is not good for CXO not at all

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