China Forestry faces bond payment deadline amid audit delays

China Forestry, a timber producer backed by private equity firm Carlyle, faced a payment deadline on its US dollar bonds yesterday as it seeks more time to audit its books and complete a debt buyback.

The firm had to pay the overdue half-yearly 10.25 per cent coupon on US$180 million of November 2015 securities to avoid a default, according to a May 16 Hong Kong stock exchange filing. A one-month grace period expired yesterday. China Forestry paid the previous coupon in November after a similar delay.

"They're effectively in default by our definition," Johnson Ng, an analyst in Hong Kong at Standard & Poor's, said on Friday. "The nature of their business requires a lot of capital for harvesting and trading. We think they'll face difficulty in getting financing support, especially against the backdrop of accounting issues."

China Forestry had no further information to add to past announcements, citing stock exchange restrictions, a spokeswoman for the company said yesterday. Three phone calls to China Forestry's offices in Beijing were not answered.

China Forestry's 2015 bonds traded at 32.875 US cents on the dollar on Friday, having lost 7.1 per cent this year after falling 3.4 per cent last year.

The company published interim accounts for the period to June 30, 2013, on September 12 and has sought to delay issuing its full-year accounts three times this year.