Small steelmaker FerroChina said on Thursday it was unable to repay 706 million yuan ($104 million) in working capital loans and had suspended operations at its manufacturing plant in China. In a sign the global credit crisis is spreading to the corporate sector in Asia, the Singapore-listed firm also said it has 2.03 billion yuan worth of loan facilities and notes that may become due and payable. Other working capital loans of 2.493 billion yuan may also become due and payable, it added. “The company is currently in active negotiations with its financial lenders,” the statement said. It did not specify the lenders involved. According to the firm’s annual report, the company’s principal bankers are Citibank (China), BNP Paribas, China Construction Bank and Commerzbank.

FerroChina was considered a potential takeover target for months after it appointed Merrill Lynch to look for strategic options. Last month it said it was in talks with an unidentified potential investor which could invest in the firm. In its latest statement, FerroChina said it is still talking to the potential investor, but added there was no assurance these talks will be successful which may leave it cash-strapped.

Source: Reuters