Chairman of Embattled Huishan Dairy Raises $54 Million for Debt
(Beijing) — The chairman of China Huishan Dairy Holdings Co. Ltd. has raised HK$420 million ($54 million) by selling shares in Jilin Jiutai Rural Commercial Bank Corp. in a bid to resolve the embattled dairy product producer’s debt crisis.
Yang Kai sold 90.9 million Hong Kong-listed shares of Jiutai Bank between March 27 and April 5 through Champ Harvest Ltd., a firm controlled by Yang, according to a filing on the Hong Kong Stock Exchange. As a result, Yang’s shareholding in the bank dropped from 15.55% to 3.57%.
Huishan has been under the spotlight since March 24, when the company’s share price unexpectedly plunged 85% in early trading, the largest one-day percentage drop ever recorded on the Hong Kong Stock Exchange.
Huishan has been in default on some of its loans since late March. Bankers told Caixin that Huishan currently owes about 12 billion yuan ($1.7 billion) to as many as 70 financial institutions, including 23 banks. The Bank of China, which granted a 3.3 billion yuan credit line to Huishan, is the company’s largest creditor, followed by Jiutai Bank, whose largest shareholder was Yang at the time.
On the morning of March 27, shares of Jiutai Bank plummeted by more than 10%, the largest fall since its listing in the Hong Kong stock market on Jan. 12. A Hong Kong Stock Exchange filing revealed that Yang obtained HK$ 67.7 million by selling 14.2 million shares on that day.
Jiutai Bank said in a stock exchange filing on March 28 that the total outstanding balance of the two credits that the bank had granted to Huishan was 1.35 billion yuan, and there was no default on any interest due.
Contact reporter Dong Tongjian (firstname.lastname@example.org)