adplus-dvertising
Connect with us

Business

Chinese builder in debt jam says it will make bond payment – CP24 Toronto's Breaking News

Published

 on


Joe Mcdonald, The Associated Press


Published Wednesday, September 22, 2021 7:08AM EDT


Last Updated Wednesday, September 22, 2021 7:08AM EDT

300x250x1

BEIJING (AP) — A Chinese real estate developer whose struggle to avoid defaulting on billions of dollars of debt has rattled global markets says it will pay interest due Thursday to bondholders in China but gave no sign of plans to pay on a separate bond abroad.

The Chinese government, meanwhile, added to investor anxiety Wednesday by staying silent about whether it might intervene to restructure Evergrande Group’s $310 billion debt.

Evergrande’s struggle to comply with financial restrictions imposed by regulators to curb rising debt in the Chinese economy has prompted fears a default might cause global shockwaves. Economists say Beijing can prevent a Chinese credit crunch but wants to avoid appearing to arrange a bailout while it tries to force other companies to reduce reliance on debt.

Evergrande appears to be trying to buy time for “an orderly default rather than a shocking implosion” by paying bondholders in China on time while skipping payments abroad, said Vishnu Varathan of Mizuho Bank in a report.

“Averting a default altogether is highly unlikely,” Varathan said.

If regulators get involved, they are likely to focus on protecting families that paid for apartments that are yet to be built, economists say. That would cause bigger losses for banks, construction companies and other creditors.

Evergrande, which ratings agency S&P Global says is the world’s most-indebted real estate developer, said it will make a payment due on a 4 billion yuan ($620 million) bond denominated in Chinese yuan.

A company statement said details were “settled in negotiations outside the market” but gave no indication whether that meant any change in the payment. The bond has a 5.8% interest rate, which would make the normal amount due 232 million yuan ($36 million) for one year.

Evergrande did not say if it would make a separate payment of $83 million due Thursday to holders of a U.S. dollar-denominated bond that matures in March.

Evergrande appears to be favoring Chinese creditors in order to negotiate with a circle of friendly banks and other institutions that hold its debt, said Mizuho’s Varathan. He said that “optimizes relief from creditor action” in China.

A default on a bond in China would trigger a cross-default on a bond abroad but missing a payment abroad doesn’t have the same effect with in China, according Varathan. He said it would be harder to renegotiate with a “diverse and dispersed” investor pool abroad.

China’s main stock market benchmark, the Shanghai Composite Index, closed 0.4% higher following the announcement. Hong Kong financial markets, which have been jolted by Evergrande’s predicament, were closed for a holiday.

Some commentators suggest Evergrande might become China’s “Lehman moment,” referring to the failure of Wall Street bank Lehman Brothers, a forerunner to the 2008 crisis. But economists say the risk of global market contagion is low.

Evergrande has sold billions of dollars of assets to pay down debt since regulators tightened limits on borrowing by China’s real estate industry last year. The company is one of China’s biggest private sector conglomerates, with more than 200,000 employees, 1,300 projects in 280 cities and assets worth 2.3 trillion yuan ($350 billion).

Its billionaire founder, Xu Jiayin, expressed confidence in a letter to employees this week that the company will quickly resolve its debt problems.

Other major developers such as Vanke Co., state-owned Poly Group and Wanda Group have not reported similar problems. But hundreds of smaller developers have shut down since regulators in 2017 started tightening control over fundraising tactics such as selling apartments before construction begins.

The ruling party has declared reducing debt and financial risks a priority since 2018. But total corporate, government and household borrowing rose to nearly 300% of economic output last year from 270% in 2018, unusually high for a middle-income country.

As of June 30, Evergrande reported 2 trillion yuan ($310 billion) of outstanding debts to bondholders, banks, construction contractors and other creditors.

Of that debt, 240 billion yuan ($37.3 billion) was due within a year, nearly triple Evergrande’s 86.8 billion yuan ($13.5 billion) in cash holdings, according to a company financial report.

Beijing allowed the first corporate bond default of the communist era in 2014 in an effort to force borrowers and lenders to be more disciplined. Defaults by private sector borrowers have gradually been allowed to increase, but the government has arranged bailouts for state-owned companies.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Business

Tech giant Nvidia unveils higher performing ‘superchips’ to power AI – Al Jazeera English

Published

 on


Nvidia CEO Jensen Huang tells developers conference that computing is advancing at an ‘insane’ rate.

Nvidia has unveiled its latest family of chips for powering artificial intelligence as it seeks to consolidate its position as the major supplier to the AI frenzy.

“We need bigger GPUs. So, ladies and gentlemen, I would like to introduce you to a very, very big GPU,” CEO Jensen Huang said on Monday at a developers conference in California, referring to the graphics processors that are vital in the creation of generative AI.

300x250x1

The event, dubbed the “AI Woodstock” by Wedbush analyst Dan Ives, has become a can’t-miss date on big tech’s calendar due to Nvidia’s singular role in the AI revolution that has taken the world by storm since the introduction of ChatGPT in late 2022.

“I hope you realise this is not a concert, this is a developers’ conference,” Huang joked as he took the stage in a packed arena usually reserved for ice hockey games and concerts.

Nvidia’s powerful GPU chips and software are an integral ingredient in the creation of generative AI, with rivals like AMD or Intel still struggling to match the power and efficiency of the company’s blockbuster H100 product, launched in 2022.

Apple, Microsoft and Amazon have also developed chips with AI in mind but for now are stuck trying to get their hands on Nvidia’s coveted products to deliver on their own AI promises.

That linchpin role in the AI revolution has seen Nvidia’s share price rise by roughly 250 percent over the last 12 months, propelling the company above Amazon when measured by market capitalisation, behind only Microsoft and Apple.

Not letting up, Nvidia told the audience of developers and tech executives it was releasing an even more powerful processor and accompanying software, on a platform called Blackwell – named after David Blackwell, the first Black academic inducted into the National Academy of Science.

Blackwell GPUs were AI “superchips” four times as fast as the previous generation when training AI models, Nvidia said.

“The rate at which computing is advancing is insane,” Huang said.

They would also deliver 25 times the energy efficiency, Nvidia said, a key claim when the creation of AI is criticised for its ravenous needs for energy and natural resources when compared with more conventional computing.

Unlike its rivals Intel, Micron and Texas Instruments, Nvidia, like AMD, does not manufacture its own chips, but uses subcontractors, mainly the Taiwan Semiconductor Manufacturing Co.

Given the geopolitical concerns with Taiwan and China, this could be a potential weak spot, and the US has banned Nvidia from sending its most powerful chips to Chinese companies.

Nvidia also announced other AI developments, including a platform for training humanoid robots.

Project Gr00t, which Nvidia said was not named after the Guardians of the Galaxy movie character Groot, was described as the “world’s first human foundation model”.

Gr00t-powered robots will be designed to understand what people say and mimic people’s movements, learning from experience how to interact with the world, according to Nvidia.

The models “will enable a robot to learn from a handful of human demonstrations so it can help with everyday tasks and emulate human movement just by observing us”, Nvidia said.

Nvidia said it was also working with Apple to put AI capabilities into the newly-released Vision Pro spatial computing gear.

The collaboration comes as Apple is under pressure to show it is not being left behind by Amazon, Google, Meta and OpenAI when it comes to artificial intelligence.

Nvidia also unveiled the Earth-2 Cloud Platform for predicting climate change, using simulation by AI supercomputers.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Business

This business owner brought most of her manufacturing home from China — and feels punished for it

Published

 on

A Canadian company that manufactures children’s toy couches finds itself facing a stiff bill for import tariffs after bringing production home to this country.

While Barumba Play is no longer importing a majority of its product, a single component of the couches has been reclassified by the Canada Border Services Agency and is no longer tariff-free.

The company’s flagship product is a couch for children made of pieces that can be easily taken apart and reassembled for play. Sara Feldstein founded the company in Markham, Ont., in 2021 and initially produced the couches entirely in China.

As the couches were classified as a children’s toy, Feldstein told CBC News they were not subject to tariffs and were brought into Canada without import fees. Tariffs can be used by the Canadian government as a form of taxation on imports to protect Canadian economic development.

300x250x1

Trouble started for her in 2023, when Feldstein opted to move production of the couches to Canada from China.

“I on-shored my manufacturing to Canada from China and have been penalized for it,” she said.

A woman is sitting on a pink toy couch.
Business owner Sara Feldstein sits on a Barumba Play couch. ‘I on-shored my manufacturing to Canada from China and have been penalized for it,’ she said. (Anis Heydari/CBC)

Feldstein was able to manufacture every part of the couch in Canada except for cloth slipcovers, which she had to keep producing in China.

She received a letter from the Canada Border Services Agency in the summer of 2023 indicating it felt classifying the slipcovers as part of a toy was incorrect. This contradicted what Feldstein was told to expect from business advisors and industry experts that she turned to for advice before opting to transfer manufacturing most of her product to Canada.

Instead, Feldstein says the slipcovers have been lumped in with textiles such as carpets, bed linens and table linens — and now she’s expected to pay 18 per cent duty on imports.

Three cloth slipcovers are pictured on the floor.
These are some of the play couch slip covers that the Canada Border Services Agency has classified as textiles, rather than a component part of a toy. (Submitted by Sara Feldstein)

The CBSA declined an interview request from CBC News. After this article was published, it issued a statement that the Customs Act doesn’t allow it to speak about individual cases, but explained that goods are assessed for tariffs based on how they are “presented at the border,” and that changes to what is being imported can result in a change to tariff classifications.

The CBSA also said if someone importing goods disagrees with a tariff decision, they can appeal, but only after they’ve paid all amounts owed, plus interest.

According to Feldstein, her business now owes at least $47,000 in retroactive tariffs, and she expects costs could escalate up to $70,000 while she waits for the appeals process to play out.

WATCH | How a classification change led to surprise tariffs for this Canadian company: 

Ontario company hit with unexpected tariffs for manufacturing in Canada

5 hours ago

Duration 1:54

After bringing home her manufacturing from China to Canada, Barumba Play founder Sara Feldstein received a letter from the Canada Border Services Agency saying they had reclassified her children’s toy couches from the category of toys to textiles, resulting in an 18 per cent duty that they’re applying retroactively to the past several years of operation. She can appeal but would still need to front the full amount of money owed first. 

Businesses must pay, even during appeals

It’s a cost she’s not sure her business can bear, because she must pay the tariffs now even while she tries to appeal the decision.

That appeal process could take close to a year, according to the CBSA’s current processing times.

“It would make me want to tell others, don’t bother bringing your business back to Canada. Do it overseas. It’s safer that way,” she said.

It’s not unusual for businesses to be caught in the complicated web of tariffs, according to lawyer David Rotfleisch of TaxPage.com, a law firm specializing in tax and business.

A bald man with blue geometric eyeglasses is pictured in front of a bookcase, wearing a suit.
Tax lawyer David Rotfleisch says businesses have to pay tariffs as assessed before appeals are heard. (Gary Morton/CBC)

He confirmed that businesses such as Feldstein’s need to pay assessed tariffs even while mounting a legal challenge because collection is not paused or halted when an appeal is launched.

“Tariff classifications are complex and make income tax look relatively simple,” Rotfleisch said.

“Wrong assessments affect a lot of businesses because they can’t pay it, and by the time the appeal process runs its course, it’s going to take time and [businesses] can’t manage it. So they have to literally shut their doors.”

Suspending payments may not be solution

But eliminating the requirement to pay, even before appeals are exhausted, may not be the right solution, according to Jenifer Bartman, a business advisor based in Winnipeg.

“You could have companies not paying attention to the rules, saying, ‘We’ll go ahead and do this, and if it goes wrong, we’re not going to be out of pocket any time soon,'” she said.

A woman with long blonde hair in a blue sweater faces the camera on a video call.
Business advisor Jenifer Bartman says companies must seek out advice before changing supply chains across borders. (Anis Heydari/CBC)

Bartman pointed out that importing products to Canada, whether partial or fully manufactured, requires a lot of preparation and advice.

“It’s really important for business leaders, especially if they’re venturing into a new aspect of their supply chain …  to understand what the rules are in advance because they can save themselves a lot of time and trouble down the line.”

Business owner says she did her research

For her part, business owner Feldstein said she did consult with experts prior to repatriating manufacturing of her couches to Canada. The decision by CBSA to reclassify surprised her.

Feldstein maintains the slipcovers currently being classified as textiles by CBSA should still be considered just a part of the couches she sells as a children’s toy, and not a separate linen that could be used on its own.

If the slipcovers are a part of the toy couch, they would not have the tens of thousands of dollars in tariffs assessed.

According to the CBSA’s website, to be considered a “part,” the item must meet criteria including that it has no alternative function, be marketed and shipped along with other parts of the product, needed for “safe and prudent use” of the item, and be “committed” to use with the unit.

Barumba Play’s founder isn’t sure what comes next, but until the problem is resolved she’s holding off on growing her business.

“I’m very hesitant to spend money on other items right now when this is in limbo,” said Feldstein.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Business

'Tone-deaf': MPs grill telecom CEOs about wireless prices at committee – The Globe and Mail

Published

 on


The chief executives of Canada’s three largest telecom companies stressed that phone and internet prices are coming down during an appearance before MPs on Monday, noting that increased data usage and high spectrum costs may be some reasons Canadians feel otherwise.

The three CEOs – Rogers Communications Inc.’s RCI-B-T Tony Staffieri, BCE Inc.’s Mirko Bibic BCE-T and Telus Corp.’s T-T Darren Entwistle – appeared virtually at the House of Commons industry committee meeting.

Committee members voted unanimously last month to summon the trio to testify after a previous invitation to the chief executives resulted in other corporate representatives showing up instead.

300x250x1

The committee is studying the accessibility and affordability of wireless and broadband services – an issue that came to the forefront in January when Rogers confirmed it was raising prices by an average of $5 for some wireless customers not on contract.

Mr. Staffieri was pressed on the matter Monday, with Liberal MP Francesco Sorbara suggesting the move was “tone-deaf.”

“Would you not admit that the timing was not great?” he asked.

Mr. Staffieri replied that the price hike only affected customers on legacy plans.

“It was important to us to make sure that these customers had choice,” he said. “With two clicks, they could get onto a plan that was in market and give them the best value for money for their circumstance.”

Conservative MP Ryan Williams questioned Mr. Bibic and Mr. Entwistle on whether Bell and Telus would raise their prices in response to Rogers’s move.

Mr. Bibic would not say whether Bell plans to follow suit, insisting the company’s focus is on lowering costs, while Mr. Entwistle said he remained confident Canadians would see price declines but was “not going to talk about price setting in a forum with my two competitors sitting right here.”

Some members of the committee have said they are concerned about cellphone and internet prices in Canada, arguing Canadians pay too much for those services.

But the CEOs cited recent Statistics Canada data showing wireless prices have declined 16 per cent in the past year and 47 per cent over the past five years.

“If you just compare in Canada, 2019 to 2024 alone, we’re offering in some cases 10 times more data for $40 less a month,” Mr. Bibic said. “You can see the massive drop.”

Mr. Entwistle said that “massive increase in data consumption” partly explains why some Canadians may hold the perception that their telecom service prices have gone up. He said Canadians are “amongst the highest data consumers in the world,” which is why the major companies are offering them bigger plans than before.

“If you mathematically cut the cost in half, but the user uses twice as much data as what they did, historically, the cost is going to look the same to the user,” he said.

Mr. Entwistle added the “missing” element of the conversation pertains to the cost of the physical cellphone itself, which he said can make up nearly half of an overall mobile bill.

“That’s an area where we do not control the economics,” he said.

“At the end of the day, those economics are determined by the device manufacturers.”

The three chief executives also each told the committee that the cost they pay in Canada for wireless spectrum – the electromagnetic frequencies that enable smartphone communications – are among the highest in the world and make it more expensive to operate.

Last November, Canadian wireless companies collectively spent about $2.1-billion on chunks of 5G bandwidth in the federal government’s most recent spectrum auction. At the time, experts said the cost of spectrum incurred by the carriers could lead to higher mobile prices as companies recoup their investments.

Mr. Entwistle said that in 2021, spectrum fees accounted for $100 on the annual wireless phone bill of every Canadian.

“That fee reflects the fact that Canadian wireless operators have historically paid the highest prices for spectrum through successive spectrum auctions in the world,” he said.

“That is a significant part of our cost base and I would argue it’s inconsistent with a policy of trying to improve affordability.”

Mr. Bibic added that if government-imposed spectrum prices in Canada followed the global average, “every Canadian’s wireless bill would be $5 per month lower.”

But Conservative MP Rick Perkins suggested the blame also falls on the companies themselves. He said Rogers’s quarterly earnings reports frequently “brag about your average revenue per user going up every year.”

“That’s why Canadians feel they’re paying more, because you’re charging them more,” he said during an exchange with Mr. Staffieri.

“Average revenue per user does not equal price,” Mr. Staffieri replied, noting it is “an accounting metric … and it includes services that the customer can choose to add on.”

“And yours has gone up from $50.75 in 2020, to almost $60 now, in only four years,” Mr. Perkins said.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Trending