May 26, 2022

HSBC files for China Fishery winding up in Cayman Islands

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lafayetteFrom Undercurrent News

China Fishery Group revealed on Monday that lender HSBC has also filed for a winding up order and the appointment of a provisional liquidator in the Cayman Islands, in addition to Hong Kong.

In a stock exchange release, the Pacific Andes International Holdings (PAIH)-owned company announced that HSBC filed the order in the Cayman Islands on Nov. 27, seeking to have KPMG appointed as the provisional liquidator.

A summons was filed by HSBC seeking the appointment of Fergal Thomas Power of KPMG Hong Kong; Kris Beighton and Alexander Lawson, both of KPMG Cayman Islands, as joint provisional liquidators of the company as a matter of Cayman Islands law.

The grand court directed that the application should be heard on Dec. 8, 2015 an also listed the hearing of the petition for Jan. 8, 2016.

On Monday, China Fishery also filed a request in relation to the suspension of trading of bonds issued by CFG Investment S.A.C, a subsidiary.

Also on Monday, both China Fishery and Pacific Andes Resources Development (PARD), both Singapore listed subsidiaries of Hong Kong listed Pacific Andes International Holdings (PAIH), filed an application to extend the time they have to publish annual accounts.

The reason given by China Fishery and PARD is that both is “the basis of assessment of carrying amount of certain assets and liabilities needs to be confirmed due to the appointment of provisional liquidators. Both are seeking an extension of time until Dec. 28, 2015.

Trading in the shares of China Fishery and PARD have now also been suspended, after the companies applied for a temporary halt on Nov. 26.

On Nov. 26, HSBC, filed a motion requesting the winding up of China Fishery in court in Hong Kong. The court then appointed KPMG’s Edward Middleton, as well as Power and Beighton as joint provisional liquidators of the Company in Hong Kong.

On Nov. 27, an analyst with ratings agency Standard and Poor’s (S&P) told Undercurrent News that the process that HSBC has kick started means China Fishery faces accelerated debt re-payments it is unlikely to be able to cover.

Having already triggered an event of default (EoD) on the terms of its $300 million senior unsecured notes due in 2019 by missing a $31m interest payment, an agreement from 25% of the note holders could force accelerated repayment of the principals and interest imminently.

In addition to the $300m notes, the company also has a $650m loan [due March 2018] and revolving facility from HSBC, Rabobank, DBS Bank, China CITIC International, and Standard Chartered, provided in March 2014.

“After an EoD happens, and if more than 25% of the bond holders agree, China Fishery will need to immediately repay all principal and accrued and nonpaid interest, which we believe they don’t have the means to,” Lillian Chiou, an analyst with S&P, told Undercurrent, on Nov. 27.

“We don’t think they have the financial capacity to meet this kind of re-payment immediately. It is getting into a very difficult situation for them, for sure,” she said.

“In theory”, this accelerated re-payment could happen at any time, said Chiou.

This, however, “could be the last straw”, she said, the day after S&P downgraded China Fishery to “SD”, or selective default.

Meanwhile, China Fishery, which is the holding for the family’s fishing interests in Peru and Africa and its Russian pollock sourcing operations, will also trigger an EoD if the company can’t dismiss the court order appointing KPMG as provisional liquidators.

“There could be another EoD on the involuntary assignment of the liquidator,” said Chiou.

If China Fishery can’t dismiss this within 60 days of the [KPMG] appointment on Nov. 25, this triggers immediate accelerate of repayment on principal and interests, with no need for 25% of votes from notes holders, she told Undercurrent.

“How can China Fishery avoid the accelerate of repayment? Seek majority of the notes holders to agree and waive the acceleration of repayment,” she said. “If China Fishery does not file an objection, another way they can get out of it is, they can get the majority of bondholders to consent and provide a waiver, so they don’t need to immediately repay.”

IMAGE: Lafayette, now known as Damanzaihao, is China Fishery Group’s flagship processing vessel.

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