Yuan Dong denies taking stake in PTA maker

22 October 2008 05:28 [Source: ICIS news]

SINGAPORE (ICIS news)--China’s Zhejiang Yuan Dong Polyester denied that it would invest in Hualian Sunshine Petrochemical following local news reports that it would inject yuan (CNY) 900m ($131m) into the ailing company, a senior company official said on Wednesday.

“We didn’t agree to such an arrangement, as reported by the newspapers and websites,” said the official.

“We’ve been talking to them to see how we can help them, as [Hualian Sunshine] is a major supplier of feedstock to us, and we’ve had lots of business with them, that’s all,” added the official.

Hualian Sunshine, China’s largest non-integrated terephthalic acid (PTA) producer, stopped its three lines totalling 1.8m tonnes/year of capacity unexpectedly earlier this month due to unconfirmed financial issues.

Yuan Dong is one of the largest polyester producers in China and a major consumer of Hualian Sunshine's PTA.

Reports in the local media over the past two days had quoted unnamed sources that one of Hualian Sunshine’s shareholders the Huaxi group, had reneged on its earlier decision to inject more funds into the ailing company.

Instead, Yuan Dong and the Shaoxing county government would inject up to CNY 1.4bn ($204m) into Hualian Sunshine, according to the news reports.

A Shaoxing county government official confirmed it had committed to injecting CNY 500m ($73m), but declined to give more details. A Huaxi spokesman declined to comment when contacted.

Other shareholders of Hualian Sunshine include China Union Developing Group, Jiabaili Textile and Zhanwang Enterprise.

The three shareholders were said to have been experiencing financial pressures and were unable to inject any further funds into the terephthalic acid maker, market sources added.

($1 = CNY6.83)

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By: Salmon Aidan Lee
+65 6780 4359

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