Top Chinese paper board producer Nine Dragons Paper (2689.HK) said on Tuesday it plans to repay all its syndicated loans by end-2009 and aims to cut its net gearing in half to 60 percent in fiscal year 2011.
The company, which saw its net profit dive nearly 70 percent for the six months ended December, said the operating environment had improved and it planned to produce 8.55 million tonnes of paper in 2009, up from 7.75 million tonnes in 2008.
Growth will come from China in the future as the overseas market was still weak due to the global economic downturn, Chairwoman Cheung Yan told reporters.
"Exports are likely to contract further," Cheung said.
Contributions from exports were expected to fall to about 20 percent of total in the year ending June 2009, from about 50 percent the previous year, and the company had shifted focus to the domestic sector, she said, and did not elaborate further.
Debt-laden Nine Dragons planned to make early repayment to all its syndicated loans this year, but would not disclose the amount involved. The company had HK$15 billion ($1.94 billion) bank borrowings by the end of 2008.
The company repaid two syndicated loans last December for a total of HK$1.5 billion and its net gearing level was at 102.7 percent by the end of last year.
Last month it offered to buy back $284 million of its 2013 bonds at 53 cents to the dollar and had bought by about 60 percent of the bonds.
"We hope to keep (gearing level) at 60 percent in 2010/11," Cheung said.
Shares of the paper board maker have fallen 61 percent in the past year, underperforming a 39 percent drop on the blue chip Hang Seng Index .HSI on an anticipated sharper decline in exports in 2009 and continued pressure on profit margins.
The company had said it aimed to repay debt early, cut capital spending this fiscal year and delay capacity expansion plans to weather the global financial crisis and rapid industry integration.
Fitch downgraded Nine Dragons' credit ratings last month to reflect the company's weaker operating performance and financial metrics. [ID:nWLA7897] ($1=7.752 Hong Kong Dollar) (Reporting by Fion Li)
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