* Regulator only requested trade halts six times since 2011
* Previously ordered suspensions of Hanergy. Hontex shares
* Huishan has missed loan payments, board members have quit
(Adds Huishan's latest statements in paragraph 3 and 5)
By Elzio Barreto
HONG KONG, May 8 Hong Kong's securities
regulator ordered all trading in China Huishan Dairy Holding Co
Ltd shares to be suspended on Monday, indefinitely
extending a suspension in place for more than a month as
concerns about the company's finances grow.
The unusual move by the Securities and Futures Commission
(SFC) follows a warning by China's largest integrated dairy firm
last month that it was unable to operate because most of its
board had quit.
Huishan said in a statement it had received notice from the
Securities and Futures Commission (SFC) of the suspension.
The SFC can issue so-called Rule 8 directions under Hong
Kong's listing rules "on grounds that the market is misinformed,
disorderly or unfair".
The dairy company also said on Monday that Bank of China's
Macau branch had requested it repay the principal of a $50
million loan dated April 28, 2014, and interest of $937,363.11
by May 16.
Huishan's stock has been suspended at the company's request
since March 24, when it plunged 85 percent. The firm has missed
loan payments and lost contact with a key executive in charge of
its finances and cash.
The SFC declined to comment on the reason for the halt in
trading on Monday. Last month, Ashley Alder, head of the
regulator, declined to say whether the watchdog was
investigating Huishan but said it would continue in its efforts
to investigate initial public offering (IPO) sponsor failings.
Huishan, which went public in a $1.3 billion IPO in 2013,
did not reply to a request for comment.
The regulator rarely exercises its Rule 8 power, only doing
so six times since 2011, according to annual reports. By
contrast, the U.S. Securities and Exchange Commission ordered
eight trading suspensions in the second quarter alone.
Previous SFC trading halt orders include Hanergy Thin Film
Power Group which the regulator investigated after its
shares mysteriously tumbled 50 percent in a matter of minutes.
Trade in the shares remains suspended, although the parent
company has since paid down overdue debt.
Other examples are China High Precision Automation Group Ltd
whose shares have been suspended since 2012, while sports fabric
maker Hontex International Holdings was delisted following an
investigation into information provided in its IPO prospectus.
Huishan grabbed headlines last year when it sold and leased
back part of its herd, but its most recent troubles have laid
bare the risks of excess leverage and financial engineering in
unexpected quarters of corporate China.
On the back foot since a December attack by U.S.-based
short-seller Muddy Waters, Huishan has asked the regional
Liaoning government for support. It also hired Deloitte Advisory
last month to analyse its financial position after holding talks
with creditor banks about rolling over loans.
Controlling shareholder Champ Harvest, which owns 70.8
percent of its stock and is majority held by Huishan Chairman
Yang Kai, has pledged nearly all of the shares to secure loans.
In the event of a default, banks could dump the shares in the
market, creating a downward spiral in prices.
(Additional reporting by Donny Kwok, Michelle Price and
Bengaluru newsroom; editing by Edwina Gibbs and David Clarke)