China Fishery bonds drop as HSBC winds up its operation

The Singapore-listed China Fishery Group Ltd's bonds dropped as HSBC decided to wind up operation of their two companies in Hong Kong.

HSBC Holdings has submitted an application to Hong Kong High Court to appoint a liquidator for the wind up. The total outstanding bank loan stands at $680 million for China Fishery Group. The Hong Kong High Court has appointed three liquidators for winding up of two companies. China Fishery Group's bonds are due in 2019. The sales prospectus says the notes will become default if a legal proceeding against the company initiated under any insolvency or bankruptcy.

HSBC has applied to Hong Kong High Court to wind up two companies -- China Fishery Group Ltd and China Fisheries International Ltd. some bondholders appoint law firm Kirkland & Illis for advice. HSBC is the major banker to China Fishery Group. Other bankers to China Fishery Group include DBS Group Holdings Ltd, China Citic Bank Corp, Rabobank Groep and Standard Chartered Pld. The five banks provided $450 million syndicated loan to China Fishery.

According to a report by Bloomberg, HSBC spokesman Adam Harper said: "HSBC filed an application to High Court of Hong Kong Special Administrative Region to appoint provisional liquidators to two companies with operations in Hong Kong, China Fishery Group Ltd and China Fisheries International Ltd. The bank has also petitioned for the winding up of the two companies." Geoff Walsh, Hong Kong-based spokesman for China Fishery Group, declined to comment on the development.

As per the reports from Yahoo Finance, China Fishery Group's bonds plummeted by 34 percent on Thursday (26 November) after news hit the market that HSBC Holdings Plc has filed to Hong Kong High Court to appoint liquidator for winding up the company. 2019 China Fishery Group's bonds were bid at 33 cents on the dollar, according to price data from SC Lowy Financial (HK) Ltd.

China Fishery Group and its parent company, Pacific Andes International Holdings Ltd, received notices last August from Monetary Authority of Singapore and Commercial Affairs Department. The notices stated commencement of investigation under the Securities and Futures Act. Subsequently on 10 November, Moody's Investors Service lowered China Fishery Group to Caa2, its third lowest score. Moody's said that the company didn't have enough funds to cover operating and debt expenses for next 12 months.

The total outstanding bank loan at China Fishery Group rose to $680 million in 2014 from $675.9 million 2013. Five banks extended $450million syndicated loan to China Fishery in March 2014. According to Neil McDonald, a partner of the firm in Hong Kong, said that some of the China Fishery bond holders have already appointed a legal firm Kirkland & Ellis to advise them on the present situation.

Meanwhile, the High Court of Hong Kong has appointed three KPMG executives as provisional liquidators for the winding up the two companies of Pacific Andes International Holdings. According to undercurrentnews.com, KPMG's Edward Middleton, Fergal Power and Kris Beighton have been named by Hong Kong High Court as joint provisional liquidators for China Fishery Group and China Fisheries International. The appointment of liquidators is effective from 25 November 2015.

China Fishery Group's bonds are due in 2019. The sales prospectus says the notes will become default if a legal proceeding against the company takes place under any applicable bankruptcy, insolvency or other similar law.