* Huishan faces 16 new legal actions from creditors
* Says hires adviser to help restructure debt
* Outstanding debt near $4 bln (Adds details from statement, context)
By Adam Jourdan and John Ruwitch
SHANGHAI, June 2 (Reuters) - China Huishan Dairy Holdings Co Ltd is facing fresh legal action over money it owes to creditors, ramping up pressure on the indebted firm whose finances are coming under intense scrutiny.
The dairy, already facing legal action from creditor Gopher Asset Management, said late on Thursday it was aware of “16 additional legal proceedings”, with a total amount claimed under the new proceedings of 421.8 million yuan ($61.90 million).
Huishan’s stock has been suspended from trade since March 24, when it plunged 85 percent. Since then most of the firm’s directors have quit, it has missed loan payments and lost contact with a key executive in charge of its finances and cash.
The firm has also appointed an adviser to negotiate with creditors the restructuring of the group’s debt and that of companies owned by Chairman Yang Kai, it said in a statement to the Hong Kong stock exchange.
The advisor, Shenzhen Fuhai Yintao Asset Management, would “assist in formulating and negotiating a possible restructuring with creditors,” it said.
It was not immediately clear what impact the legal challenges would have on any debt restructuring plan.
Huishan, which has said it is China’s largest integrated dairy firm, added that as of March 31, the company’s unaudited interest-bearing loans totalled around 22.9 billion yuan and contingent liabilities were 3.9 billion yuan.
Huishan grabbed headlines last year when it sold and leased back part of its herd, but its most recent troubles have laid bare risks of excess leverage and financial engineering in unexpected quarters of corporate China.
Now Hong Kong’s banking watchdog is questioning banks over a $200 million syndicated loan raised by Huishan, sources told Reuters, while a court in Shanghai has frozen some of its assets following an application by creditor Gopher.
Huishan, however, said in the statement that business operations remained “ordinary”, adding that sales for the year to end-March had risen 21.6 percent to 5.5 billion yuan.
April sales fell 41.3 percent from the same month last year, it added, partly due to “tightening of credit policies of certain major suppliers/creditors” since the trading halt, which it said was having an “adverse impact” on cash flow.
The firm’s board was left paralysed in April after a spate of resignations left Huishan with just two executive directors, including embattled chairman Yang and finance director Ge Kun. Ge has been missing for over two months.
Huishan’s said Yang’s son Yang Jianing had been appointed as a vice president of the company, focused on sales and marketing. ($1 = 6.8142 Chinese yuan renminbi) (Reporting by John Ruwitch and Adam Jourdan; Editing by Christopher Cushing and Muralikumar Anantharaman)