Quick Take: Huishan Dairy Says Most Creditors Agree to Restructuring Plan

Debt-ridden Huishan Dairy Holdings Co. said more than half of its creditors have agreed to support a restructuring plan that aims to create a new company to take over Huishan Dairy as well as other Chinese-mainland companies that are personally owned or controlled by the chairman.

The creditors who agreed to “act in concert” with this plan represent more than two-thirds of the entire outstanding debt owed by Huishan Dairy and other companies controlled by its chairman, Yang Kai, the company said in a statement dated Wednesday.

As of the end of March, total outstanding debt of the listed company Huishan Dairy stood at 26.7 billion yuan ($3.94 billion), the company said earlier.

The restructuring plan is to ultimately inject all assets of Huishan Dairy and its subsidiaries and Yang’s onshore companies into a new holding company that will be wholly owned by onshore creditors, the statement said.

In August, some creditors disputed an earlier restructuring plan that aimed to inject both onshore and offshore assets into the new holding company. Under that plan, creditors would recover 14% to 20% of the debts, and Yang and his management team would be given a 15% stake in the new company contingent on securing a white-knight investor. It is not known whether this plan remains a restructuring option.

Sources told Caixin that some creditors, including Bank of China, did not agree to that plan. Some of them said they will reject any restructuring proposal that would give Yang a control of Huishan, citing distrust in him.

Huishan Dairy’s Wednesday statement also said Champ Harvest Ltd., controlled by Yang and the controlling shareholder of Huishan Dairy, was served by a major creditor with an application to start liquidation proceedings.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)