Zhongzhi flags insolvency issue in letter to investors

Zhongzhi Enterprise Group is insolvent and faces major risks in continuing operations, the private investment conglomerate told investors in an open letter on Wednesday.

According to calculations by intermediary institutions, its assets total about 200 billion yuan ($28 billion), while its total debt is between 420 billion yuan and 460 billion yuan, the company said in the letter.

Since these assets are mostly in the form of debt and equity investments, the recoverable amount is expected to be low because of the long tenure of these assets and difficulties in collection. At the same time, resources available for debt repayment in the short term are far below its overall debt level. Therefore, the company's liquidity is exhausted and its asset impairment is serious, according to the letter.