Five years after its annus horribilis, Malaysia Airlines is still struggling to survive, helped only by government largesse and the national carrier’s political importance, the Financial Times reported. There may be a lifeline in the form of a stake sale, but time is running out as market conditions sour, while moves to divest could leave the ruling coalition exposed to attack from its key rival. In March 2014, flight 370 from Kuala Lumpur to Beijing mysteriously disappeared over the Indian Ocean, with 239 passengers and crew on board.
Thomas Cook, the UK tour operator, lost nearly a fifth of its market value after it confirmed it was seeking a further £150m on top of the £750m already secured as part of a rescue deal with its debtholders, the Financial Times reported. The Financial Times revealed on Friday that Thomas Cook was in talks with bondholders to secure the additional capital, as part of a bailout involving its largest shareholder, the Chinese conglomerate Fosun, and its lending banks.
Billionaire Mukesh Ambani’s Reliance Industries Ltd. is on a mission to reduce debt after racking up $76 billion in capital expenditure in the last five years, Bloomberg News reported. The conglomerate aims to be a zero-net-debt company in 18 months, Asia’s richest man told shareholders Monday. Aiding that effort would be a decision to sell 20% of Reliance’s oil-to-chemicals business to Saudi Arabian Oil Co., or Aramco, at an enterprise value of $75 billion. The company will also start preparing to list its retail and telecommunications units within five years, Ambani said.
Creditors’ hopes of resurrecting India’s Jet Airways and salvaging some value from the bankrupt airline were dealt a fresh blow on Monday as two potential investors said they were no longer interested in putting money into the business, Reuters reported. The billionaire head of Vedanta, Anil Agarwal, whose family trust Volcan Investment had said it was looking at taking a stake in Jet, backed out on Monday. Etihad Airways, which already owns a minority stake in Jet, also said it was not interested in reinvesting in the airline.
China’s factory gate prices shrank for the first time in three years in July, stoking deflation worries and adding pressure on Beijing to deliver more stimulus as the economy sputters amid an intensifying trade war with the United States. With demand slowing at home and abroad, Chinese manufacturers are having to cut prices to keep market share, depressing profit margins and discouraging the fresh investment needed to get the economy back on its feet, Reuters reported. Falling prices for crude oil, iron ore and other raw materials are also playing a part.
Tata Steel’s UK division sank deeper into the red over the past financial year, as output fell at the country’s largest producer because of repair work on a furnace. The manufacturer registered a 1 per cent increase in annual sales to £2.41bn in the period ended 31 March because of higher global steel prices, according to its annual report, the Financial Times reported. But its operating loss before one-off items widened to £157m, from £48m last year, because of lower liquid steel production and sales volumes, the company said.
China’s legions of regional banks are feeling the strain. The country’s two-year crackdown on risky financing and the trade war with the U.S. have slowed economic growth, triggering debt defaults that are exposing them as the weakest link in the credit chain, Bloomberg News reported. Several lenders have fallen into deep trouble this year, with others -- perhaps many -- expected to follow. What’s different is that China seems to have thrown out the old playbook of injecting state funds into struggling lenders to keep them alive.
India’s Supreme Court upheld the ability of homebuyers to drag property developers into bankruptcy proceedings as several real estate firms are going bust in Asia’s third-largest economy, Bloomberg News reported. Once a homebuyer establishes default before a bankruptcy court, the onus is on builders’ to prove that the consumer does not wish to take possession of their house to avoid proceedings, a three-judge bench headed by Justice Rohinton F Nariman said on Friday. The court ruled homebuyers’ rights will remain at par with lenders.
Dewan Housing Finance Corp Ltd (DHFL), one of India’s so-called shadow banks, on Thursday said it might not be able to fulfil its debt obligations due in the near future while banks review its restructuring plan, Reuters reported. DHFL, one of the largest housing finance companies in India, has roughly 1 trillion rupees of debt and is in the process of seeking lender approval on a restructuring plan designed to help it to ride out a liquidity crunch and restart its lending business.
New bank lending in China likely slowed in July, a Reuters poll showed, reinforcing expectations that policymakers will need to announce more support measures in coming months to stabilize the cooling economy as U.S. trade pressure builds, Reuters reported. The rapidly worsening trade dispute, rising borrowing costs, and this week’s sudden drop in the yuan have fanned worries that the world’s second-largest economy could face a sharper slowdown. But policymakers are also increasingly worried about rising debt and financial risks, particularly in the property market.