SHANGHAI • China is headed for its latest corporate default as a cement-maker said it will fail to pay bond investors and will file for liquidation.

China Shanshui Cement Group "will be unable to obtain sufficient financing on or before" a maturity date today on its two billion yuan (S$447 million) of 5.3 per cent securities, it said in a statement yesterday. The company has decided to file a winding-up petition and application for appointment of provisional liquidators with the courts there, it said.

That "will also constitute an event of default" on its US$500 million (S$711 million) of 7.5 per cent dollar bonds due in 2020, according to the filing.

Investors have been scarred by defaults from Chinese firms this year in industries including property and commodities, as President Xi Jinping shifts towards greater reliance on services to drive growth amid the weakest economic expansion in a quarter of a century.

Shanshui would be at least the sixth company to renege on obligations in the nation's onshore bond market this year.

"For offshore creditors, recovering value from Shanshui's dollar bonds will be a long process given that onshore creditors will be all over the company first in the case of liquidation,'' said Standard Chartered credit analyst Zhi Wei Feng.

An ad hoc committee of noteholders has been formed to engage with Shanshui about the 2020 securities, according to a statement from law firm Akin Gump Strauss Hauer & Feld.

Mr Henry Li, Shanshui's chief financial officer, said when reached by phone that the company is still fundamentally sound and it hopes to talk to creditors to restructure the debt. Shanshui has been mired in a shareholder fight for control since April.

BLOOMBERG