China’s Huishan had emergency creditor meeting before rout

Bloomberg

China Huishan Dairy Holdings Co.’s creditors held an emergency meeting on Thursday to discuss a cash shortage at the milk producer, according to a peer-to-peer lender that attended the gathering.
Government officials from Liaoning province, where Huishan is based, convened the meeting and asked the company’s lenders to refrain from demanding immediate repayment, according to Hongling Capital, a P2P platform that brokered a 50 million yuan ($7.3 million) loan to Huishan in February. The government officials, who stressed the need for social stability, also agreed to buy a plot of land from Huishan for 90 million yuan and instructed the company to sell equity to solve its liquidity problem, Hongling said in a statement.
The lender’s account may help shed light on a rout in Huishan shares that erased $4.1 billion of market value in less than 90 minutes on Friday and heightened concerns over unexplained swings in Hong Kong stocks. Huishan, which didn’t answer calls to its investor relations department on Monday, said in an exchange filing on Friday that it would comment further after completing an
inquiry. Calls to the Liaoning government’s financial services office weren’t answered.
Hongling said it flew two executives to Shenyang, the capital of Liaoning province, to attend the meeting at the Friendship Hotel on Thursday, after Huishan paid 479,000 yuan of interest a half day after it was due on March 21. The one-year loan, arranged by the P2P lender with money from individual savers, carries an annual interest rate of 13.5 percent, Hongling said.
Major Huishan creditors at the meeting, including Bank of China Ltd. and Jilin Jiutai Rural Commercial Bank Corp., expressed confidence in the dairy maker and said the firm would be able to repay overdue interest within four weeks, according to Hongling. Bank of China said it couldn’t comment immediately when contacted by Bloomberg News.
Jilin Jiutai’s shares tumbled as much as 11 percent in Hong Kong on Monday. The lender considers the drop a “normal fluctuation,” an external spokeswoman for the lender said by phone from Hong Kong. “The share price is affected by various factors,” she said, adding that the bank had no further comment.