Luoyang Glass Fights With Parent for RMB 608 Mln

Date: 15 November 2006

Nov. 8, 2006 (China Knowledge) – Luoyang Glass has started arbitration against its parent firm, hoping to retrieve RMB 608 million of funds, according to the South China Morning Post on Tuesday.

The arbitration committee in Luoyang, a city in the western part of Henan province, has accepted its application, according to Luoyang Glass.

The unprofitable glassmaker added that funds used by its controlling shareholder and associates totaled RMB 620 million at the end of March, but only RMB 12 million has been repaid. This will affect the cash flow and subsequently, the operations and financial positions of the company and its associated companies.

Funds are particularly important for the debt-laden Luoyang Glass, which has incurred a total loss of RMB 969 million since 1994 when it went public in Hong Kong. At the end of June this year, the company holds RMB 153 million of cash, while net current liabilities stood at RMB 688 million. In addition, Luoyang Glass has to repay a RMB 861 million loan, which already has been permitted to be delayed.

Uncertainty looms for Luoyang Glass. Early this year, the Hong Kong Stock Exchange advised that shareholders should consider sacking chairman Liu Baoying and vice-chairman Zhu Leibo.