Minsheng confirms 1bn yuan in outstanding loans to troubled Huishan Diary

More than 70 creditors, including 23 commercial banks and P2P platforms now trapped in Huishan’s debt crisis, worth more than 12 billion yuan, according to mainland press

PUBLISHED : Friday, 07 April, 2017, 9:18pm
UPDATED : Friday, 07 April, 2017, 9:20pm

Minsheng Bank has revealed outstanding loans worth 1 billion yuan (US$144 million) with troubled north China-based Huishan Dairy.

The bank suspended any new credit to the company last December, after noticed the dairy producer had run into problems, it said on Friday, although it insisted Huishan and its related companies had not yet defaulted on paying any debt interest payments.

“Minsheng Bank noticed last December that Huishan Dairy had problems after over-quick credit growth, at the same time as a slowdown in business growth.

“Based on our on-site research and investigation, the bank has added risk control measures, such as increasing its collateral buffer,” Minsheng said in a statement.

Of the outstanding amounts, 700 million yuan was been issued to Huishan Dairy by Minsheng’s Shenyang branch, while the other 300 million yuan was issued by its Hong Kong branch to Huishan’s biggest shareholder, Guanfeng Co, using a stake pledge as collateral.

Hong Kong listed, Huishan Dairy saw its share price plummet 85 per cent within a few hours on March 24, a day after its top executives held an emergency meeting to discuss capital shortages, and repaying its 11 billion yuan worth of debt.

It has been reported in the mainland that 70 institutions are exposed to more than 12 billion yuan worth of loans to Huishan, including 23 commercial banks, and non-banking financial institutions including peer-to-peer lending platforms and financial leasing firms. Beijing Youth Daily quoted the figures from a document obtained from a creditors’ meeting held by the Liaoning provincial government’s financial department.

Ping An bank announced on March 25 that its outstanding loans to Guanfeng were worth HK$2.1 billion (US$270 million), based on collateral of 3.4 billion shares in Huishan Dairy.

However, the value of those pledged shares has fallen to HK$1.4 billion, based on a stock price of 42 Hong Kong cents, after trading in its stock was suspended after the 85 per cent plunge rout.

Adding to the company’s woes, the head of its treasury has gone missing, and four of its directors have resigned from their posts.

Lead shareholder Yang Kai, who controls Guanfeng Co, sold off part of his stake for 87 million yuan on the day of the share plunge, without saying whether the selling was forced.