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Naomi Rovnick

Bondholders have placed the offshore assets of mainland property developer Skyfame Realty into receivership, meaning the firm may have missed out on a lifeline deal to sell its main asset, the real estate portion of the Westin Guangzhou hotel. 
Hong Kong-listed Skyfame owes US$196 million in convertible bonds to investment bank Merrill Lynch and hedge funds DKR Oasis Capital Management  and PMA Investment Advisers.  
Oasis, based in Connecticut and Hong Kong, appointed Deloitte Touche Tohmatsu as receiver of all of Skyfame's assets that are legally registered outside China, including the holding company for the Westin, on Monday.  
The developer agreed to sell the Westin to HNA Group  for HK$2.5 billion in September to repay the convertible bondholders. The deal was meant to be signed yesterday but this had not happened by press time. HNA is a state-owned enterprise that jointly owns Hainan Airlines  with US billionaire George Soros.  
Julia Cheung, Skyfame's company secretary, blamed the receivership for the uncertainty. 
She said the talks with HNA had been 'upset' and 'frustrated' by Deloitte's presence at Skyfame. The accounting firm has installed its own staff to manage the developer's offshore assets. 
Several people involved in the situation said that Agricultural Bank of China, which is also owed money by Skyfame, was considering seizing the Westin because its parent company was in receivership. 
The Westin Guangzhou is owned by Skyfame but operated by US hotelier Starwood, which is unaffected by its landlord's troubles. 
'We are still unaware of what action will be taken by the bank,' Cheung said. 
Deloitte's head of reorganisation services for China, Derek Lai,  said he was not aware the bank had made any threats to foreclose on the Westin hotel. 
An Oasis spokesman said the bondholders believed the actions they had taken were necessary to protect their investments, but they remained hopeful that an amicable solution could be reached. 
There has been a recent wave of restructuring battles between Chinese firms and international banks and hedge funds. 
Shanghai caterer Fu Ji Food and Catering  went into provisional liquidation last month because it could not repay HK$2.2 billion of convertible bonds it issued in 2006-07 to banks, including the defunct Lehman Brothers.  
In June, former Macau legislator David Chow Kam-fai  missed a deadline to buy preference shareholders, including Merrill Lynch, out of a US$400 million investment they made in his Macau Legend, owner of the Fisherman's Wharf  theme park and the Landmark Casino.  
Skyfame breached two key terms of its convertible bonds. In January, it failed to repay a HK$220 million loan it took out with Lehman Brothers. And in May, it announced it had not secured land use rights for a new property development in Guangzhou, having promised the bondholders it would get the rights. 
Skyfame's shares were suspended on Tuesday  at HK$0.53. 
The developer posted a net loss of HK$392 million for the first half of the year, saying visits to the Westin had slumped because of the global economic crisis. 
An HNA spokesman said he had no knowledge of the Westin sale talks. 
Additional reporting by Charlotte So



Developer blames receivership for doubts over Guangzhou hotel sale