Shenzhen International Enterprise (000056), a company involved in the commodities retail, real estate, and trading sectors, rolled out a new plan to borrow 1.7 billion yuan from financial institutions, after shareholders rejected last month its plan to seek loans of 1.4 billion yuan, reports China Securities Journal, citing a company filing.
The funds raised will go toward the repayment of 1.5 billion yuan of loans taken by subsidiary, Shenzhen Rongfa Investment, and the remaining 200 million yuan will be used for daily operations.
The company planned in January to borrow 1.4 billion yuan from Ping An Trust in order to repay 1.2 billion yuan of loans taken from the Shenzhen branch of China Construction Bank (601939,0939.HK) in June 2011.
Compared to the annual interest rate of up to 16 percent from the loan it previously planned to take, the current loan it intends to apply for has a rate of 12 percent.
Shenzhen International Enterprise said the success of this loan application will lower its financing cost.
The company added it will no longer provide guarantees for loans, and a subsidiary will have to use a shopping mall project as collateral for loans.
Shenzhen International Enterprise anticipates a 2011 loss of 98.26-125.78 million yuan.