Chinese glass maker Shanghai Yaohua Pilkington Glass Co Ltd will issue CNY 750 million (USD 93.2 million/EUR 78.4 million) of short-term debt, the company decided on 15 February 2006.
The company wil…
Chinese glass maker Shanghai Yaohua Pilkington Glass Co Ltd will issue CNY 750 million (USD 93.2 million/EUR 78.4 million) of short-term debt, the company decided on 15 February 2006. The company will use the proceeds to speed up working capital turnover, overcome daily cash shortages and optimise its liability structure. The interest rate on corporate short-term debt is currently 3.21%. When the cost of the issue is included, the total financing cost of the Yaohua Pilkington debt will be 3.61%. The interest rate in China on bank loans is currently 5.58%, giving a 1.97-percentage-points difference between the bank rate and the bond rate. Even if a 10% discount on bank loan interest is achieved, the preferential loan interest rate would still be 1.41 percentage points higher than the bond rate. By choosing a debt issue, the company will save over CNY 10 million (USD 1.24 million/EUR 1.05 million) from the difference between the loan rate and the bond rate, according to the China Securities Journal. Yaohua Pilkington is listed on the Shanghai Stock Exchange. The company“s biggest shareholders are China Composite Materials Group Ltd, Shanghai Yaohua Glass Factory and Pilkington International Holding Company, each with slightly over 16%.