China Essence faces redemption funding problems, seeks postponement

By Caroline Salls

Pittsburgh, Dec. 28 - China Essence Group Ltd. is facing difficulties in raising enough funds to make a HK$30 million principal amount third redemption payment on its HK$250 million zero-coupon guaranteed convertible bonds due 2011, according to a news release.

The company is required to make the third redemption payment on Dec. 31.

However, because of the challenging operating environment over the past few months, which was partially attributable to decreasing potato starch prices worldwide, China Essence said it experienced suppressed seasonal sales volumes and turnover.

In addition, the company said the difficult environment has affected its customers, leading to a slow repayment of receivables.

China Essence said it is committed to meeting its obligations and is currently in talks with the bondholders and trustee regarding the postponement of the third redemption.

China Essence is an integrated producer of potato products in China and is based in Beijing.

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