China’s Shandong Tranlin Goes into Bankruptcy and Reorganization

China’s Shandong Tranlin Paper, a pulp and paper producer headquartered in Gaotang, Shandong province, has filed for bankruptcy and the reorganization of its debts and asset

The Gaotang local district court announced in October that it is going to designate a trustee to take charge of the process.

The scale of the insolvent company’s debts will be assessed by the court-appointed trustee.

According to Fastmarkets RISI’s Mill Asset Database, Shandong Tranlin has nearly 430,000 mtpy of printing and writing (P&W) paper capacity and 50,000 mtpy of tissue paper capacity. It also has 300,000 mtpy of straw pulp capacity in Gaotang.

Shandong Tranlin was once a leading straw pulp and paper producer in China.

In early 2014 it received a loan of RMB 7.9 billion ($1.1 billion) based on an intellectual property portfolio of 34 trademarks and 110 patents from a group of Chinese banks, led by national policy bank China Development Bank.

Shortly after securing the loan, the company embarked on an ambitious expansion, planning to build massive straw pulp and tissue capacity and to use pulp waste to produce fertilizer at its existing Gaotang mill in Shandong province, at two greenfield mills in northeastern China (one in Jiamusi, Heilongjiang province and the other in Dehui, Jilin province), and most notably, in the USA.

However, few of the projects have been played out.

In June 2014, the Chinese company set up a US subsidiary, eventually named Vastly, to build a $2 billion integrated straw pulp, tissue and fertilizer plant in Chesterfield county, Virginia, the USA.

The megasite was scheduled to see construction begin in 2017 and to be in full operation by 2020, but the project stalled out in 2017.

The Virginia Economic Development Partnership has taken title of the 58-acre property Vastly purchased for the planned plant, as part of an effort to recover a $5 million grant it made over the proposed project back in 2014.

In China, Shandong Tranlin installed a 200,000-mtpy straw pulp line and several 10,000-mtpy tissue machines at a new mill in Jiamusi, Heilongjiang province, but they were idled after a brief trial run in 2017.

The company's financial difficulties began to emerge in late 2016 when a media report revealed multiple lawsuits for overdue payments or disputed debt.

Its financial situation deteriorated in early 2018, which resulted in a halt to all of its expansion schemes and month-long downtime at all its existing mills in Shandong.

The debt-laden company has never fully recovered, and its pulp and paper production has stayed low since then.

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