A CASH crunch at one of China’s best known conglomerates is getting worse as the company said it will not be able to pay its upcoming dollar notes.

China Minsheng Investment Group Corp.’s offshore unit will not be able to repay the principal, as well as the interest on the 3.8 percent US$500 million bond due August, after considering its liquidity and performance.

On Thursday, the property-to-financial conglomerate announced it only managed to repay part of the principal on a 6.5 percent 1.46 billion yuan note.

The development underscores the liquidity crisis that has been pressuring the Shanghai-based firm that aspired to become China’s answer to JPMorgan Chase & Co. It will be the first time that the firm’s dollar bond creditors will miss out on repayment.

China Minsheng Investment, also known as CMIG, in April said cross-default clauses were triggered on its dollar notes totaling US$800 million. These include US$300 million in debt that China Construction Bank Corp. repaid on the company’s behalf in June as the bank provided a standby letter of credit — effectively a pledge to repay if the borrower can’t. Its dollar bond due next month was quoted around 50 U.S. cents on the dollar Friday, down from about 75 U.S. cents earlier in the week, according to credit traders.

CMIG is the brainchild of Dong Wenbiao, the former chairman of China Minsheng Banking Corp., China’s largest non-State bank. Dong convinced 59 private sector companies to join forces as the company’s founding shareholders. CMIG’s funding eventually dried up as its investments struggled and lenders pulled back because of tighter regulation. (SD-Agencies)