A Chinese mining company, whose flamboyant boss made headlines for spending $11m on his daughter’s wedding, has defaulted on a $50m trust loan, underlining the stresses in China’s vast shadow banking system.
The investment product, which was backed by loans to coal miner Liansheng Resources, failed to repay investors last Friday, according to state media reports. It had raised Rmb289m ($47.7m) from wealthy clients of China Construction Bank.
Although this tranche – the fourth of six – is now technically in default, investors may yet see some of their money returned under a restructuring of the company. Liansheng has previously failed to repay investors on earlier tranches of maturing trust loans, having borrowed a total of Rmb1bn.
The fortunes of Liansheng and its charismatic founder, Xing Libin, have been a mirror of the rise and fall of China’s coal mining sector. Mr Xing was reported to have bought mining rights for the “price of a cabbage”, before building his company into a big performer in the sector.
In 2012, he made headlines after throwing a lavish celebration to mark his daughter’s wedding and the 10-year anniversary of Liansheng.
He flew family and friends to a tropical beach getaway on China’s Hainan island and arranged a procession of Ferrari sports cars during the nuptials. The overall celebration costs came to about $11m.
But the coal sector has since fallen on hard times, as China seeks a move from heavily polluting industries. A glut of US imports and domestic overcapacity have further damped prices.
by loans to Liansheng
中国联盛能源有限公司（Liansheng Resources Group，简称联盛能源）对一笔约5000万美元的信托贷款发生违约，突显出中国庞大的影子银行业体系承受的压力。该公司行为张扬的老板邢利斌曾因拿出1100万美元为其女儿举办婚礼而成为新闻头条。