HONG KONG/SHANGHAI, March 28 China Huishan Dairy
Holdings Co Ltd on Tuesday said that it had fallen
behind with some loan repayments but denied media reports that
its chairman had misappropriated company funds or that the firm
had issued forged invoices.
The dairy firm's stock plunged 85 percent on Friday wiping
off about $4 billion from its market value, hurt by unverified
reports about the company's finances. The firm has previously
come under attack from U.S.-based short-seller Muddy Waters.
In a Hong Kong exchange filing, Huishan said it had been
"late in some bank payments" and that it had asked the regional
Liaoning government for support and convened a meeting with 23
creditor banks last week to ask for loans to be rolled over.
It said the Liaoning government had proposed an "action
plan" to solve any overdue interest payments within two weeks
and to help bolster the group's liquidity within a month.
But it added that it was facing an increasingly challenging
environment and given its share price fall, there was "no
assurance" as to the continued support of its creditors.
The firm said media reports that Bank of China had conducted
an audit of the firm and found a large number of forged invoices
and that the firm's controlling shareholder had misappropriated
up to 3 billion yuan were false.
"The Company categorically denies having approved the issue
of any forged invoices and does not believe there to be any
misappropriation," it said in the statement. It added Bank of
China had assured the firm no such audit had been carried out.
In December, short-seller Muddy Waters questioned Huishan's
profits and said it had inflated spending on its cattle farms to
artificially raise capital expenditure figures - an attack that
also led to a trading suspension.
The company also said it had not been able to reach one of
its executive directors in charge of the firm's finances and
cash since March 21, when she indicated work stress and said she
would take a leave of absence.
The company's shares, halted since March 24, will continue
to suspended until the board can get more clarity on the firm's
(Reporting by Donny Kwok and Adam Jourdan; Editing by Edwina