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China Fishery Bonds Plunge as HSBC Seeks to Wind Up Company

(Bloomberg) -- China Fishery Group Ltd.’s bonds plunged after HSBC Holdings Plc, a lender to the company, said it asked the Hong Kong High Court to wind up the firm and appoint a liquidator.

“HSBC filed an application to the High Court of the Hong Kong Special Administrative Region to appoint provisional liquidators to two companies with operations in Hong Kong: China Fishery Group Ltd. and China Fisheries International Ltd.,” HSBC spokesman Adam Harper said by e-mail Thursday. The bank has also petitioned for the winding up of the two companies, Harper added.

Geoff Walsh, a Hong Kong-based spokesman for Singapore- listed China Fishery Group, declined to comment.

The company’s 2019 bonds were bid at 33 cents on the dollar as of 10:21 a.m. in Singapore, down 34 percent on the day, according to prices from SC Lowy Financial (HK) Ltd. Trading in the company’s shares was suspended earlier Thursday in Singapore after it issued a statement requesting the halt pending the release of an announcement in relation to certain actions taken by one of its lenders.

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In August, China Fishery Group and its parent Pacific Andes International Holdings Ltd. said they had received notices from the Monetary Authority of Singapore and the Commercial Affairs Department stating they were being investigated for an offence under the Securities and Futures Act. On Nov. 10, Moody’s Investors Service downgraded the company to Caa2, its third lowest score, saying the company didn’t have enough cash to cover operating and debt expenses over the next 12 months.

"There’s little information on what’s going on, but they were expected to be negotiating the terms of their loans with the banks," Annisa Lee, a Hong Kong based credit analyst at Nomura Holdings Inc. said by phone. "This winding up petition seems to indicate that the negotiations are not going so well."

As well as HSBC, the major bankers for China Fishery Group are DBS Group Holdings Ltd., China Citic Bank Corp., Rabobank Groep and Standard Chartered Plc, according to China Fishery’s 2014 annual report. The company had total outstanding bank loans of $680 million at the end of that year, up from $675.9 million the previous year.

In March 2014, the five banks arranged a $450 million syndicated loan for China Fishery, according to Bloomberg data.

Some of the China Fishery bondholders have appointed the legal firm Kirkland & Ellis LLP to advise them, according to Neil McDonald, a partner at the firm in Hong Kong.

The sale prospectus of the company’s bonds due in 2019 bonds says the notes would be in default if a legal proceeding is started against the company under any applicable bankruptcy, insolvency or other similar law and remains un-dismissed for 60 consecutive days.


--With assistance from Chanyaporn Chanjaroen.


To contact the reporters on this story: Christopher Langner in Singapore at clangner@bloomberg.net; Lianting Tu in Hong Kong at ltu4@bloomberg.net To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net; Andrew Monahan at amonahan@bloomberg.net