Four Huishan directors quit after unexplained stock plunge, while finance chief remains missing
Huishan said it has filed a report with Hong Kong police over the whereabouts of its finance chief Ge Kun, who has lost touch with the company.
Four of the 10 board members of China Huishan Dairy Holdings have resigned, a week after the unexplained 85 per cent plunge of the stock’s price in Hong Kong, while the trouble dairy firm said its treasury chief remains nowhere to be found.
The dairy farm operator, whose shares were suspended after a dramatic sell-off that wiped out over US$4 billion of its market value within hours, said all four of its independent non-executive directors had tendered their resignations, all because they want to spend more time on their other commitments.
That leaves only five executive directors and one non-executive currently in charge of the cash-starved company, and one of them is still missing.
Ge Kun, a long-time Huishan executive who oversees the company’s treasury, human resources and cash operations, is last known to be in Hong Kong before she lost contact. Huishan had lodged a missing person’s report with local police, according to a Friday filing to the Hong Kong Stock Exchange.
Huishan’s sudden stock crash came one day after a closed door meeting between the company and at least 23 of Huishan’s creditor banks and peer-to-peer financing platforms. Chairman Yang Kai admitted that the company was facing a cash shortage during the March 23 meeting, while its unfolding debt crisis, particularly in view of the treasury head’s disappearance, has triggered mounting concerns among creditors.
Among the four directors who just stepped down, Tsui Kei-pang is a solicitor in Hong Kong, and Kan Yu-leung worked with KPMG for about 26 years before retiring in 2014 as an audit partner with the accounting firm’s Beijing office. The other two directors Song Kungang and Gui Ruixia are both dairy industry experts in mainland China.
Huishan is one of the largest taxpayers in the northeastern rust belt province of Liaoning. It employs an estimated 40,000 workers in the region that’s been beset by lingering economic malaise and high unemployment.
The Shenyang-based company owes as much as 21.7 billion yuan (US$3.15 billion) in debt as of December, 2016, according to ThePaper’s report, citing data from an unnamed creditor. Huishan has 1.38 billion in loans due in 2018, according to Bloomberg data.
Thirsty for cash, Huishan borrowed money from money managers, peer-to-peer lending platforms and financial leasing firms, according to mainland regulatory documents.
Already, a Chinese creditor, Gopher Asset Management, has submitted an application to freeze Huishan’s assets in Hong Kong, which the dairy farm operator said was rejected by a local court.
In the Friday filing, Huishan also called for “additional time to verify its financial position” before an update can be given to shareholders in a week’s time, citing Ge’s absence and the Qing Ming Festival holiday in mainland China.