HONG KONG (AP) -- A conglomerate owned by a southern Chinese provincial government said Monday it lost billions of dollars and owes billions more.
But after an emergency meeting with bankers, officials came out with a pledge to keep the group afloat at least for the short term.That was welcome news to some of the bankers, who have gotten themselves in trouble with billions in bad loans on the mainland, though others grumbled privately that the commitments they had gotten were not enough.
The bankers have been nervously watching the situation at Guangdong Enterprises (Holdings) Ltd. since its troubles became apparent last year.
The conglomerate sits at the center of a tangled web of companies with investments in a variety of industries, including brewing, textiles, construction and food.
Guangdong Enterprises revealed Monday it lost $2.4 billion in the first nine months of 1998 and confirmed it owes another $2.9 billion.
The provincial Guangdong government has been injecting funds to keep the conglomerate in business, while auditors and advisers go through its books and try to streamline its operations.
A debt restructuring plan is not expected until April at the earliest, said representatives from the investment bank Goldman Sachs, appointed to supervise the conglomerate's restructuring.
By that time, creditors should know whether they have to substantially write down or write off some of the debts.
For now, the Guangdong government "is committed to keeping the group trading and being liquid," said Steve Shafron, Goldman Sachs' managing director in Hong Kong. He said the group has some solid and profitable businesses.
Guangdong Enterprises is the parent of Hong Kong-listed Guangdong Investment and Guangnan Enterprises (Holdings) Ltd.
In sharp contrast to the situation at Guangdong Enterprises, the Guangdong government allowed another huge group, Guangdong International Trust and Investment Corp., also known as Gitic, the province's main investment arm, to go bankrupt earlier this year, sending shock waves through the financial community.
Guangdong's executive vice governor, Wang Qishan, said the government has decided to save Guangdong Enterprises, and not Gitic, because a collapse of Guangdong Enterprises would have hurt the Hong Kong stock market, where its affiliates are listed.
Because of "the Asian financial crisis, the Guangdong government must consider the stability of the Hong Kong market," Wang said.
Lenders here have written off billions in bad loans to Chinese entities.
Some of what the Guangdong government will give to Guangdong Enterprises to improve its balance sheet could be physical assets, such as a water supply business, a power plant, bridges and highways.
Wang reiterated China's commitment to separate the public sector from businesses, but said that as the domestic economy weakens, "We can't just leave them without any support at this juncture."
Earlier, the chairman of Guangnan Enterprises, Sun Guan, and two directors, Huang Xiaojiang and Huang Bingtong, resigned amid auditors' findings of dubious transactions.
Another Guangnan executive, Li Ruihua, was arrested late last year for "offering advantages" and conspiracy to defraud.