SHANGHAI, Jan 6 - Top Chinese TV maker Changhong , which is suing U.S. distributor Apex to wrest back an alleged half-billion dollars in debt, said on Thursday it has won a $360 million credit line in a state bailout.
The loan facility from the Agricultural Bank of China, one of the country's Big Four state lenders, reflects the strategic importance of a company that is the largest tax payer in one of the most populous provinces.
"Official support for Changhong is natural because of its importance to China's home appliances market," said Lan Feiyan, an analyst at China Southern Securities. "Changhong still performs better than many of its peers, so it's seen worthy of support."
Shares in Changhong Electric Appliance Co. Ltd, which had warned of a big loss for 2004 because of write-offs for the Apex debt, jumped 4.1 percent to close at 3.82 yuan in Shanghai, outperforming the market's 1 percent slide. They have shed nearly a quarter of their value since Dec. 27, when reports of its dispute with Apex first circulated.
Changhong is suing Apex Digital Inc. in the United States over $484 million in unpaid bills. Apex Chairman David Ji has been detained in China -- for cheque fraud, according to Changhong's suit.
Apex has yet to formally respond to the suit, but in court declarations insists it paid over $340 million to Changhong in 2003 and rejects claims its cheques bounced.
THREAT DENIED
California-based Apex, which supplies inexpensive electronics to retail outlets such as Wal-Mart Stores Inc. , said Ji was forced under threat of physical harm to sign papers that transfer the company's assets to Changhong in the event of a default. The Chinese company denies the charge.
Changhong spokesman Liu Haizhong said the Agricultural Bank credit line, agreed on Wednesday, amounted to 3 billion yuan ($362 million). The bank would create a facility for Changhong to manage cash and settle accounts for trade and would also extend services to Changhong's partners, which include Apex.
Underscoring state support, the Bank of China, Construction Bank and the Industrial and Commercial Bank of China had also agreed to extend credit totalling 8.5 billion yuan to Changhong for 2005 under earlier arrangements, Liu added.
"Changhong is one of Sichuan province's backbone enterprises," a Changhong statement obtained by Reuters quoted the province's deputy Party Secretary Gan Daoming as saying.
"The provincial government will wholeheartedly support Changhong's development."
The Chinese firm continued to ship the bulk of its exports to Apex in 2003 -- when the U.S. company was alleged to have passed a series of dud cheques totalling $70 million to Changhong.
Built on inexpensive parts made in Asia, the Apex brand has become a big name for DVD players and televisions in the United States. Apex had become the biggest supplier of DVD players and the fifth-largest supplier of colour TVs there by 2003 and had more than $1 billion in annual sales, according to newspaper reports and the company's Web site.
Apex sold DVD players for as little as $60 apiece, selling 1.2 million through Wal-Mart on a single promotion day, Ji told a Chinese magazine in 2003.
The career of Ji -- born in the eastern province of Jiangsu but now a U.S. citizen -- appears to have come full circle.
Sent to work in the countryside after graduating from high school at the height of the Cultural Revolution, he clawed his way back up to graduate from Shanghai's prestigious Fudan University, state media has said.
Stints at government departments and the U.S. consulate in
Shanghai led him to study in California in 1987, according to local newspapers. He co-founded Apex in 1997.
