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Chinese Phoenix - The Debt Restructuring of The Guangdong Group
ISI Publications, Oct 2002, Pages: 182
Chinese Phoenix provides an incisive and easy-to-understand account of the landmark restructuring of the Guangdong Enterprises Group (GDE), and is essential reading for all those interested in the China market, the issues surrounding reform of state-owned enterprises, and China's finance and investment industry. The book also offers a unique insight into the tense stand-off in mid-1999 between the GDE creditors and the Guangdong government, following potentially deal-breaking government demands that creditor banks bear a share of the losses. China’s ‘Red Chip’ companies took off in the 1990s fuelled by massive credit lines from international banks and financial institutions, as well as by a growing domestic economy and ever increasing levels of foreign investment.
As Asia plummeted into financial crisis in 1997, many of these over-extended companies plummeted into serious debt problems. Widely regarded as the blueprint for PRC restructurings, Guangdong Enterprises Limited (GDE) was the largest debt restructuring of a Chinese state-owned entity (SOE), taking over two years to complete. Chinese Phoenix reveals for the first time the dramatic unfolding of the US$6bn debt deal, which featured a huge cast of players including hundreds of intermediaries and professionals. In addition to debt re-engineering, the restructuring saw the axing of outdated management structures and systems incompatible with a market economy, a move seen as vital to the long-term success of the reborn GDE. Addressing fundamental and pressing issues of SOE reform, Chinese Phoenix is the first in-depth study of a major PRC restructuring. The book benefits considerably from being written by Dr Wu Jiesi, who has held the post of assistant to the Governor of Guangdong province, and Chairman of the GDE. Chinese Phoenix offers not only a succinct technical analysis of a dauntingly complex debt restructuring, but also a unique insight into the tense stand-off in mid-1999 between the GDE’s creditors and the Guangdong government, following potentially deal-breaking government demands that creditor banks bear a share of the losses.
‘Transforming any under performing business is always a major challenge… Dr Wu’s book lays out … one management team’s efforts to complete such a transformation… China’s state-owned enterprises face distinctive challenges in making such transformations happen.’
Gordon Orr, Mckinsey.
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