China’s Huishan Dairy rolls out debt restructuring plan amid cash crunch
China’s debt-laden Huishan Dairy said its debt restructuring advisor has proposed grouping the businesses of the company and selected assets of its chairman Yang Ka and his own ventures together to form a new entity held by some of its creditors, shareholders and management.
It is the first time that China’s largest dairy farm operator has laid out plans to ease its debt nightmare as it struggles to meet payments to scores of creditors amid a drastic cash crunch. Its shares have been suspended from trading since March 24, the day it raised eyebrows among investors after slumping a record 86 per cent within just 90 minutes.
The embattled company has yet to find a white knight and no consensus has been reached among a sufficient number of its creditors regarding the new restructuring proposal, according to a company statement.
“The debt restructuring adviser has come to a view that a more realistic approach to debt restructuring would involve discussions with creditors of the Group and Yang Kai and other [YK Entities] at the same time,” Huishan said in a statement to the Hong Kong stock exchange on Monday.
There is a chance that a bankruptcy will be the end solution to this thorny issue
The new entity was expected to be registered on the mainland, which many experts said could make foreign shareholders and creditors reluctant to give it the green light.
“The new proposal will bring the financial issues related to the company under the mainland’s legal system and that means a lot of uncertainties for foreign creditors and shareholders,” said Shen Meng, executive director with boutique investment bank Chanson & Co.
