Siu-Fung condemns HSBC on wind-up

Siu-Fung Ceramics Holdings chairman Siegfried Lee Siu-fung has condemned attempts by HSBC to have the company wound up, saying the decision is against the interests of shareholders and creditors.

A court hearing on a wind-up petition filed by HSBC - the company's largest creditor with exposure of $1.3 billion - was adjourned yesterday to Monday.

Mr Lee said HSBC was the only one of 13 bank creditors to have shunned a debt-to-equity rescue proposal.

'We'll contest the liquidation petition,' Mr Lee said. 'We're extremely disappointed by HSBC's decision which doesn't show its responsibilities to minority shareholders and other creditors.' He said the majority of bank creditors had accepted a $50 million restructuring proposal offered by mainland-backed Shui Hua Development and Enterprises and another mainland firm.

According to a leaked letter written by HSBC corporate recovery manager Anthony Wright to Siu-Fung's financial adviser PricewaterhouseCoopers early this month, Mr Wright regards Siu-Fung as 'a test case' for Hong Kong creditors seeking to recover mainland debt.

Siu-Fung's prime assets centre on its interest in 33 mainland joint ventures which make sanitary ceramics products.

HSBC's letter states: 'There appears to be a common assumption amongst Hong Kong companies that, because most of the assets are located in China, they are automatically beyond the reach of their creditors. To some extent, Siu-Fung may be a test case to establish whether this proposition is correct or not.' The wind-up proposal is understood to have upset other creditors, including Citibank. However, they have yet to challenge HSBC's attempts for fear of damaging business relations.