Huishan Dairy Hit With Default Claim From HSBC

   By Chester Yung 
 

China Huishan Dairy Holdings Co. (6863.HK) said HSBC Holdings PLC (0005.HK) has claimed that it is in violation of the terms of a US$200 million loan agreement.

The troubled milk producer said in a Monday night filing with the Stock Exchange of Hong Kong that it received a letter from HSBC on Friday which alleged noncompliance with some of the loan deal's covenants.

As such, HSBC has "called events of default" regarding the 18-month-old agreement, which was fully drawn on. There is US$180 million and 156 million Hong Kong dollars (US$20 million) currently outstanding on the loan.

"The company is taking legal advice" on the letter, said Huishan.

The firm, whose stock has been suspended since March 24 after tumbling 90% in minutes that day, also said in the filing that Gopher Asset Management has obtained an order from a Shanghai court to freeze assets of six Huishan units involving a combined 546.1 million Chinese yuan (US$79.2 million).

The asset management company had applied to freeze Huishan assets in Hong Kong and assets owned by Chairman Yang Kai and his wife but this application had been rejected.

The company has been in tumult after a co-owner, who was also a company executive in charge of Huishan's treasury and cash operations, went missing several weeks ago after saying she needed to step away from her duties. The firm's independent board of directors all departed at the end of March.

Write to Chester Yung at [e-mail]

(END) Dow Jones Newswires

April 10, 2017 23:11 ET (03:11 GMT)

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