Huishan Dairy loses two more directors, leaving its chairman as only board member

PUBLISHED : Tuesday, 18 April, 2017, 11:09pm
UPDATED : Tuesday, 18 April, 2017, 11:10pm

Two more executive directors of China’s troubled Huishan Dairy Holdings have resigned, leaving company chairman Yang Kai as the only person in charge of the dairy farm operator as the last acting board member.

Kwok Hok-yin, 51, and So Wing-hoi, 47, tendered their resignations this week.

Huishan, whose shares were suspended after a dramatic 85 per cent stock crash wiped more then US$4 billion off its market value within 90 minutes, said another two of its executive directors have quit, according to a filing to the Hong Kong stock exchange.

A boardroom exodus during the last few weeks has left Yang, also chief executive of the beleaguered dairy firm, one of the only two remaining members of Huishan’s board. Ge Kun, the other remaining executive director and Yang’s right-hand woman who until recently oversaw the company’s treasury, human resources and cash operations, is still missing.

“The current board cannot generally act for and on behalf of the company as it does not meet the minimum director requirement as stipulated in the Articles of Association of the Company,” Huishan said.

How the debt bubble burst for China’s Huishan Dairy

The dairy giant, based in Shenyang in China’s northeast Liaoning province, is currently stuck in a debt trap. One day before the record stock price plunge, Yang, who pledged about 70 per cent of Huishan’s shares as collateral to borrow money, admitted in a closed-door meeting with at least 23 of the company’s creditors that Huishan was facing a cash crunch that may result in bond defaults.

So, who also left his post as chief financial officer of the company on Monday, worked with accounting firm KPMG’s mainland branches for almost 20 years before joining Huishan in 2012.

“Mr So and Mr Kwok confirmed that [they] have no disagreement with the Board and there are no other matters in respect of [their] resignation that need to be brought to the attention of the shareholders of the company,” the filing said.

In the latest twist, a Shanghai court has frozen some of the company’s assets as requested by a wealth management firm, and major peer-to-peer lending platform Hongling Capital told the South China Morning Post it planned to sue Huishan.

HSBC, on behalf of five other banks, alleged in early April that the dairy firm has defaulted on a US$200 million loan.