Huishan Dairy eyes debt restructuring - Just Food
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Huishan Dairy eyes debt restructuring

05 Jun 2017

Ailing China-based Huishan Dairy has warned it cannot give a "complete and accurate" picture of its financial position and is working on setting up talks on restructuring its debts.

Huishan Dairy eyes debt restructuring

Ailing China-based Huishan Dairy has warned it cannot give a “complete and accurate” picture of its financial position and is working on setting up talks on restructuring its debts.

The Hong Kong-listed Huishan Dairy has been rocked in recent weeks by allegations of misappropriation of funds – claims it has dismissed – and director resignations. Trading in its shares was indefinitely suspended last month.

In a stock exchange filing today (5 June), Huishan Dairy chairman and majority shareholder Yang Kai sketched out figures for metrics including cash and cash equivalents and total indebtedness as of 31 March.

However, Yang said the disappearance of Ge Kun, the executive director who had been in charge of treasury and cash operations, as well as the resignations of “key personnel” from its treasury department, meant it admitted the data it provided may not set out a complete picture.

“The financial information shown in this announcement may contain incomplete information which require clarification and or are subject to changes should further information made available to the Group such as outstanding bank confirmations and accordingly, it may not accurately reflect the financial position of the group as at 31 March 2017,” Yang said.

At present, Yang is Huishan Dairy’s sole board member, with the company unable to locate Ge and having announced a series of resignations, although some of the directors that have stepped down remained in executive roles.

Yang said Huishan Dairy’s total debts stood at CNY26.73bn (US$3.93bn) and stated it would “continue to work with its advisors, creditors and other stakeholders towards formulating and negotiating a possible debt restructuring plan”.

Huishan Dairy announced on Thursday it had appointed Shenzhen Fuhai Yintao Asset Management Co. as a debt restructuring advisor.

Alongside that announcement, Huishan Dairy said it was aware of 17 legal proceedings in China “whereby certain members of the Group are defendants or respondents in various contractual disputes with third parties”. The company said it was taking legal advice.

Yang added today: “The group will take appropriate steps to engage a forensic accountant to investigate the group’s deficiency in its financial statements. On a personal note, I am grateful, as chairman, for the continued support of the group’s stakeholders, namely the government, its creditors, customers, employees and shareholders.”