Swimwear supplier's HK$278m loan default raises red flag on SME borrowers' health
'Opportunities are found where risks are higher' was a motto of sorts for Kwok Wing, the 57-year-old chairman of cash-strapped apparel manufacturer Tack Fat Group International, according to a biography on the company's website.
Unfortunately for Mr Kwok, Tack Fat's lenders do not appear to have shared the same philosophy. The firm said last week that several banks and creditors were calling in loans and it had already defaulted on HK$278 million of its HK$1.09 billion outstanding debt.
The pending collapse of Tack Fat - which billed itself as the world's largest swimwear supplier with 15,000 employees, factories on the mainland and in Cambodia and a roster of overseas clients including Wal-Mart, Speedo and Target - appears to have taken the company's creditors by surprise.
The news may also raise a red flag at Hong Kong and mainland banks over the health of their small and medium-sized corporate borrowers, many of whom are struggling with soaring costs, shrinking sales and sagging portfolios of investments in local and mainland stocks.
'Tack Fat was previously a well-managed company ... It caught us by surprise when they defaulted on bank loans,' said Xu Cheng-fa, deputy general manager of Bank of Communications in Hong Kong.