SHANGHAI -- China Huarong Asset Management is set to receive a capital injection from a group of companies led by Citic Group, the state-owned bad-debt buyer said Wednesday, as it announced an estimated 102.9 billion yuan ($15.9 billion) net loss for 2020.

The embattled company cited a "decline of contract performance ability of certain customers" amid the coronavirus pandemic, which led Huarong to reassess asset risks and book large impairment losses. The liquidation of risky assets acquired under former Chairman Lai Xiaomin's aggressive expansion strategy also contributed to the massive loss.

Huarong said it plans to issue new shares to state-owned Citic, as well as to China Insurance Investment, China Life Asset Management, China Cinda Asset Management and Sino-Ocean Capital Holding. The move, which amounts to a bailout, is intended to head off the risk of a bankruptcy that could destabilize China's financial system.

The company will remain listed in Hong Kong, and an FAQ on its website says it has no plans to restructure its debt.

The capital injection plan marks Beijing's first attempt to resolve the Huarong crisis after months of silence. Huarong's woes have become a major test for Beijing's commitment to support troubled state-owned borrowers.

There have been a series of defaults among Chinese companies, but Huarong stands out in its scale and importance. Many overseas investors snapped up its bonds, counting on government credit support. Its group-wide bond offerings total 330 billion yuan.

Huarong was set up by the Chinese government in 1999 to acquire nonperforming assets from state-owned banks hit by the Asian currency crisis.

Lai's arrest and execution on bribery charges sent the company's management into disarray. Trading in Huarong shares has been suspended since the company postponed the release of its annual earnings report in March.