Spe­cial Alibaba steel off­shoot­maker files for bank­ruptcy gets stake in Spiel­berg firm

Rest of in­dus­try was prof­itable last year, but the Dalian­based firm took on too much debt

China Daily (USA) - - BUSINESS - By MENGJING By and YANGED ZHANG ZIMAN yangz­i­man@chi­nadaily.com.cn Con­tact the writ­ers at mengjing@chi­nadaily.com.cn and edzhang@chi­nadaily.com.cn

The film off­shoot of e-com­merce Dong­bei gi­ant Spe­cialAlibaba GroupS­teel Grouphas pur­chasedCo Ltd, a State-owneda mi­nor­ity steel­mak­er­stake in Am­blinin north­east­ernPart­ners, a China, pro­duc­tion started out­fit bankrupt­cy­backed by pro­ceed­ingsSteven Spiel­berg,on Mon­day.the lat­est in a stringIt is the of first in­vest­mentssteel com­pa­nyby Chi­nese to go bank­rupt com­pa­nies in to the use en­deavor Hol­ly­wood to re­struc­ture movie-mak­ing the magic coun­try’s to ful­fill iron their and global steel am­bi­tions. in­dus­try, ac­cord­ingThe in­vest­mentto a state­men­tis part of a made com­pre­hen­siveby the com­pany’s strate­gic listed part­ner­ship sub­sidiary agree­ment Fushun Alibaba Spe­cial Pic­tures Steel Co Group Ltd. inked with Am­blin Part­ner­sSo far, in Dong­beiBei­jing on Spe­cial Sun­day Steel,as the in­ter­netwhich is film based com­pa­nyin Dalian,builds its Liaon­ing­ca­pac­ity in prov­ince,film pro­duc­tion has de­fault­edand con­tent­nine times. cre­ation. The prin­ci­pal ZhangWei, loss pres­i­den­thas amountedof Alibaba to 5.8 Pic­tures, bil­lion said yuan that ($865 the mil­lion).Hong Kong-listed com­pany as­pires Dong­beito Spe­cial be­come Steela stu­diowas formedthat can in pro­duce 2004. content Dong­bei not Spe­cialonly for Steelthe Chi­nais the mar­ket con­trol­ling but for share­hold­er­world­wide of au­di­ences.Fushun Spe­cial“That (goal) Steel, re­quires­listed on goodthe Shang­haiskill in sto­ry­tellingS­tock Ex­change,and Steven which Spiel­berg madeis def­i­nite­lythe bankrupt­cythe best an­nounce­ment.of the best,” she said.

AboutThe agree­ment496.9 mil­lion­with Am­blin­shares of Part­ners Fushun marks Spe­cial Alibaba Steel, Pic­tures’or 38.22 per­cent­most com­pre­hen­siveof its to­tal shares, part­ner­ship held dealby Dong­beito date Spe­cial with agree­men­tS­teel wereto work frozen to­geth­erby the cour­ton pro­duc­tion,on Mon­day. mar­ket­ing and dis­tri­bu­tionThe bankrupt­cy­both glob­al­lyis the and re­sultin Chi­naof the and com­pany’sits first in­vest­ment­cred­i­tors’ ap­pli­ca­tion in­Hol­ly­wood.to the court.

Nei­ther of the two sides re­veals the spe­cific fi­nan­cial term of the deal but Alibaba Pic­tures will an get an­a­lyst tonameaat rep­re­sen­ta­tive chem99.com, on a bulk Am­blin com­mod­ity Part­ners’ in­for­ma­tion board. and con­sul­tancy web­siteThe tie-up be­tween Alibaba Pic­ture­sandLos Angeles-based Am­blin Part­ners is the lat­est among the spree of deals made in the past two years that in­tend to helpHol­ly­wood movies bet­ter ac­cess theChina mar­ket, whichison­track to­be­come the world’s largest, andChi­nese com­pa­nies to pro­duce movies that have global in­flu­ence.

Chen Shaofeng, deputy It dean has of nine Pek­ing months Uni­ver­sity’sto come up in­sti­tute­with a for re­struc­tur­ing­cul­tural in­dus­tries,plan. Dong­bei­said that Spe­cialthe ris­ing Steel’s trend prod­ucts of China-Hol­ly­wood­have been ex­ported co­op­er­a­tion to mor­eis based than on 20 mu­tual coun­tries in­ter­est. and re­gions, “Chi­nese in­clud­ing com­pa­nies car­bon and struc­tural Hol­ly­wood steel, film­mak­er­sal­loy steel, need tool each steel, other,” stain­lesshe said. steel and bear­ing Among steel. Chi­nese com­pa­nies, China’s“It’s rare rich­est­for State-owned­man Wang Jian­lin’s Dalian Wanda Group is the most ag­gres­sive one in terms of buy­ing up­Hol­ly­wood as­set. Early this year, it bought the con­trol­ling stake in Juras­sicWorld co-pro­duc­erLe­gendary En­ter­tain­ment for $3.5 bil­lion and is said eye­ing to buy Golden Globes show-run­ner Dick Clark Pro­duc­tions.

The ac­qui­si­tion spree has raised con­cern in Wash­ing­ton with law­mak­ers call­ing for greater scru­tiny of Chi­nese in­vest­ment in the US

Liu Xin­wei,

com­pa­nies to go bank­rupt. But, the gov­ern­ment won’t pay too much to bail it out,” said Liu Xin­wei, an an­a­lyst at chem99.com, a bulk com­mod­ity in­for­ma­tion and con­sul­tancy web­site.

Liu said that elim­i­nat­ing prob­lem­atic as­sets is ac­tu­ally a good thing for the in­dus­try. The gov­ern­ment also would like to see more mar­ket forces in­volved in the in­dus­try to get rid of the out­dated ca­pac­ity.

Ac­cord­ing to Liu, spe­cial steel nor­mally has high profit mar­gin. One of the di­rect causes for the de­fault is that the com­pa­nyAu­gust: has in­vested in some projects in Dalian, which has caused a heavy bur­den on its cash flow.

“Last year, prof­its of Chi­nese steel­mak­ers were gen­er­ally quite good. The de­fault of Dong­bei Au­gust: Spe­cial Steel is mainly be­cause it has raised too much debt,” said Liu.

Ac­cord­ing to Xu Jisheng, deputy June: direc­tor of the Sta­te­owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion of Liaon­ing Prov­ince, the pro­vin­cial gov­ern­ment has mo­bi­lized a lot of re­sources

Steven Spiel­berg,

me­dia in­dus­try.

Glob­al­iza­tion is one of Alibaba Pic­tures’ top pri­or­i­ties, but the com­pany wants to take ad­if­fer­ent ap­proach from Wanda. “With our plat­for­mori­ented ap­proach, we have a men­tal­ity that can bring value to peo­ple rather than tak­ing away value away from peo­ple. You don’t see us com­ing to buy up Hol­ly­wood, buy­ing up lots of as­sets,” said Zhang.

Huang Guofeng, an an­a­lyst to help the com­pany pay back the debt. Now, the com­pany is able to sus­tain nor­mal pro­duc­tion even though the debt is not be­ing re­paid.

Dong­bei Spe­cial Steel had tried a debt-to-eq­uity plan, but met re­sis­tance from its cred­i­tors.

The com­pany’s chair­man, Yang Hua, com­mit­ted sui­cide in March 2016, days be­fore the first de­fault. The com­pany has not made pub­lic any fi­nan­cial re­ports since Septem­ber 2015, de­fy­ing per­sis­tent de­mands from its cred­i­tors.

Another State-owned steel­maker mired in debt cri­sis is Bo­hai Steel Group based in Tian­jin, whose debts stand at 192 bil­lion yuan. It be­gan debt June: re­struc­tur­ing in March.

A re­struc­tur­ing plan, in­clud­ing is­su­ing cor­po­rate bonds, was fi­nal­ized for Bo­hai Steel in late Septem­ber.

The Jan­uary: slim­ming down of Chi­nese steel smelters, with a pur­pose of shed­ding crude steel ca­pac­ity by 100 to 150 mil­lion met­ric tons in five years start­ing in 2016, has seen con­sol­i­da­tion pre­vi­ously take place by merg­ers.

It’s rare for Sta­te­owned com­pa­nies to go bank­rupt.” num­ber of shares in Fushun Spe­cial Steel held by Dong­bei Spe­cial Steel that were frozen by Dalian court

chair­man of Am­blin Part­ners, and Jack Ma, chair­man of Alibaba Group, at­tend an event to an­nounce a part­ner­ship in Bei­jing on Sun­day.

Chi­nese tech gi­ant Ten­cent and PCCW, a Hong Kong tele­com and me­dia com­pany, get in­volved in a new fi­nanc­ing round for Bob Si­monds’ film and TV stu­dio named STX En­ter­tain­ment.

Russo Broth­ers form pro­duc­tion ven­ture with China’s Huayi Broth­ers me­dia group.

Ten­cent joined Los Angeles-based Tang Me­dia Part­ners in the es­tab­lish­ment of a newTV pro­duc­tion joint ven­ture with IM Global, a Hol­ly­wood film fi­nancier and sales agency. China Me­dia Cap­i­tal and the Huayi Broth­ers me­dia group are also in­volved in the deal.

Ten­cent part­nered with Hol­ly­wood power agency WME-IMG and Se­quoia Cap­i­tal China to cre­ate a new China joint ven­ture, WME-IMG China.

Wanda Group bought a con­trol­ling stake in Leg­endary En­ter­tain­ment, the pro­ducer of theGodzilla and Juras­sicWorld movies, for $3.5 bil­lion.

with Bei­jing-based con­sul­tancy Anal­y­sis, said Alibaba Pic­tures ap­proach has more chance to be passed in theUS rather than high-pro­file takeovers. “Set­ting up joint ven­tures in over­seas mar­ket­could­bean­oth­erop­tion when Chi­nese en­ter­tain­ment firms get more over­seas ex­pe­ri­ence,” he said.

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