Trouble mounted yesterday for scandal-tainted Ocean Grand Holdings after investigators found that more than 800 million yuan was missing and that the aluminium extrusion product maker had defaulted on loans.
'The company has defaulted on some of its bank borrowings. We have been told it had trouble paying some of the interest on due borrowings,' said John Bailey, a managing director of Standard & Poor's. He declined to name the banks.
The drop in bank balances of some of Ocean Grand's mainland subsidiaries from more than 800 million yuan to 38 million yuan was a huge fall in liquidity, he said.
'That is a lot of money which is supposed to be there but is not there now. I don't think the board would put the company in the hands of liquidators unless they had cash-flow concerns,' he said.
Standard & Poor's downgraded its long-term corporate credit rating on Ocean Grand from B to D, indicating the firm is in default. It also downgraded Ocean Grand's US$160 million of senior unsecured notes due 2010 from B to D.
On Monday, Ocean Grand and subsidiary Ocean Grand Chemicals Holdings appointed Deloitte Touche Tohmatsu executives Derek Lai Kar-yan and Joseph Lo Kin-ching as provisional liquidators.
Deloitte and Ocean Grand's Hong Kong management team had found discrepancies totalling 842 million yuan in the accounts of three mainland subsidiaries, the company said.
