S&P: Hua Han on negative watch

S&P said it placed the BB- long-term corporate credit rating on Hua Han Health Industry Holdings Ltd. and the BB- long-term issue rating on its senior unsecured notes on CreditWatch with negative implications.

The agency also said it placed the company’s cnBB+ long-term Greater China regional scale ratings and regional scale rating on its notes on CreditWatch with negative implications.

The watch listing follows Hua Han's slower response than expected to allegations of overstatement of its revenue, profits and cash balance in a research report published Aug. 10, S&P said.

Hua Han has yet to provide a clarification on the report and has suspended trading in its shares and debt securities since Aug. 11, the agency said.

S&P said it believes the delay in Hua Han's response has weakened confidence in the company's ability to manage the potential negative implications of the allegations.

While the validity of the allegations is still unclear, the agency said it is uncertain about how Hua Han's creditors, auditor and the regulators will respond.

Any negative response or extended investigation could weaken the company's liquidity and weigh on its operational and financial performance, S&P added.

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