SHANGHAI (Reuters) – Zhongzhi Enterprise Group on Wednesday told investors it is facing a liquidity crisis and will conduct a debt restructuring, according to video footage of a meeting, as the Chinese asset manager grapples with a deepening property market downturn.
Beijing-based Zhongzhi has hired one of the Big Four accounting firms to conduct a comprehensive audit of the firm, and is seeking strategic investors, Zhongzhi management told investors in a meeting on Wednesday, the video seen by Reuters showed.
The meeting was held after Zhongrong International Trust Co, a leading trust company controlled by Zhongzhi, missed payments on dozens of investment products since the end of July, according to investor sources.
Zhongzhi did not immediately respond to a request for comment.
Zhongzhi, with sprawling businesses ranging from mining to wealth management, is the latest major Chinese conglomerate to get into trouble, after the collapse of others including Anbang Insurance Group and HNA Group.
The liquidity stress facing Zhongzhi, which has sizable exposure to real estate, highlights the rippling effect of China’s property debt woes.
Zhongzhi is facing a “liquidity crisis” and has stopped payment to investors in its products, its management team told investors in the meeting, according to the video.
It was not possible to determine whether the company is insolvent before completion of auditing work, which began in July, the executives said.
The plan is for “self-rescue” through restructuring, with a focus on debt collection and asset liquidation, but bankruptcy is also an option, they added, without disclosing the amount of debt that needed to be restructured. (This story has been corrected to change the meeting day to Wednesday in paragraph 1 and 2)