In a separate letter seen by Reuters, Sinosteel had asked bondholders of its 2 billion yuan ($315 million) worth of October 2017 bonds not to exercise a put option on Oct 20, the earliest available date, because the company would not be able to make full payment. Some of the company's operations had been halted and it was facing a severe liquidity shortage, the letter said.
Local and international media reported the contents of the letter, but its authenticity could not be confirmed and Sinosteel did not answer calls requesting comment.
In the statement posted on the website, Sinosteel offered shares of its Shenzhen-listed subsidiary Sinosteel Engineering & Technology as additional collateral for the debt, as an inducement for bondholders to stay invested.
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Sinosteel had a debt of over 100 billion yuan with debt-to-asset ratio up to 98 percent between 2011 and 2013, according to a report dated in June 2014 issued by China Cheng Xin International Credit Rating (CCXI), a domestic rating agency.
China's steel sector has been grappling with a slowing economy, oversupply and a hefty debt burden, a legacy of over-investment during the country's infrastructure boom in the wake of the global financial crisis.