• Company controlled by tycoon Zhang Ruilin fails to make US$17 million interest payment, with knock-on effects on other loans and bonds
• Value of company’s assets fell by 65 per cent last year, before the sharp drop in oil prices this spring

a listed oil and gas firm that announced last week that it would default on a US$248 million bond.
MIE Holdings, controlled by tycoon Zhang Ruilin, failed to make a US$17 million interest payment on its bonds which was initially due on April 12, it said in a statement to the Hong Kong stock exchange. It was still unable to make the payment when the 30-day grace period expired on May 11, resulting in the default.
The bond default triggered cross-defaults on other financial contracts and potentially breaches the terms of additional loans and bonds totalling more than US$287.3 million, MIE said.
Zhang, who is MIE’s chairman, blamed the bond default on a lack of liquidity caused by the collapse of oil prices in the past two months, according to the exchange filing.
For example, Daqing crude oil prices fell from a high of US$69.06 a barrel in January to a low of US$12.33 in late April, a drop of more than 80 per cent.
“The company is experiencing increasing liquidity pressure due to the significant decline in revenue and cash flow caused by recent plunge in crude oil prices,” Zhang said.
The value of MIE’s assets fell 65 per cent to 2.93 billion yuan last year, with the company suffering an operating loss of 631 million yuan, according to its unaudited annual results.
The company’s cash and cash equivalents at the end of 2019 stood at 13.71 million yuan, a decrease of nearly 50 per cent from 2018 and not enough to cover the US$17 million bond interest payment.
On May 6, just days before the default, Fitch Ratings revoked MIE’s “C” long-term issuer credit rating.
Trading in MIE stock in Hong Kong has been suspended. Its last trading price was HK$0.065 on March 31, down from HK$0.255 in April 2019, making it a “penny stock”. It traded at a peak of HK$4.13 in April 2011.