August 25 -- Zhejiang Golden Eagle (600232) announced that it will cancel plans to build two textile production lines and will instead use funds raised by issuing convertible bonds to supplement its cash flow, reports yicai.com, citing a company filing.

Golden Eagle issued convertible bonds and raised 320 million yuan as of June 30 2006. It plans to spend that money on the construction of production facilities of 50,000-ingot gunny and cotton blended sheeting and 15,000-ingot flax spinning in Zhangjiakou city, northwestern Hebei province, and a 5,000-ingot flax spinning plant in Shengzhou, a county-level city in Zhejiang province. It spent 267 million yuan of total raised funds to buy land on which to build production facilities.

However, as it decided to halt construction of two textile production facilities, it sold the tracts to a local land reserve center. The company attributed the cancellation to falling demand for textiles in overseas markets, as well as higher labor and production costs in the domestic market. It will use the remaining funds to complement its cash flow and ease its pressure on loans.

According to Golden Eagle’s semi-annual report, its net profit rose 322.48 percent year-on-year to 13.95 million yuan in the first half of 2011, and total profit surged 698.17 percent year-on-year to 16.2 million yuan.

Revenue from its textile machine and components sales jumped 162.47 percent year-on-year to 123 million yuan in the first half. Revenue from textiles grew 18.17 percent year-on-year in the same period, with a gross margin up 13.15 percent.

Source:capitalvue