China Fishery, HSBC ink liquidator removal and sale process agreement

By Caroline Salls

Pittsburgh, Jan. 25 – Pacific Andes International Holdings Ltd. said China Fishery Group Ltd. and China Fisheries International Ltd. entered into a deed of undertaking with the Hongkong and Shanghai Banking Corp. Ltd., according to a Pacific Andes news release.

Under the deed, HSBC agreed to remove and terminate the appointment of Fergal Thomas Power, Kris Beighton and Alexander Lawson of KPMG as the joint provisional liquidators of China Fishery Group in the Cayman Islands; apply for the dismissal of the winding-up petitions in the Cayman Islands and Hong Kong; and remove and terminate any appeal related to the order issued by the Hong Kong court dismissing the continuance of appointment of joint provisional liquidators of the group parties in Hong Kong.

Because of the termination of the liquidator appointments, under the deed, the joint provisional liquidators must relinquish all of their powers.

In addition, the China Fishery Group parties and HSBC agreed to pursue a sale of China Fishery Group’s Peruvian business and/or assets.

The China Fishery Group parties also agreed to take several actions by Jan. 21, including hire Grant Thornton Hong Kong to an independent reporting accountant role for the China Fishery Group, appoint Paul Jeremy Brough as chief restructuring officer, appoint the CRO as a director of China Fishery Group with the right to participate fully in the sale process and cause Ng Joo Siang and Chan Tak Hei to relinquish all board and management positions. Those positions will be taken up by Ng Puay Yee.

Liquidator payment issue

The China Fishery Group parties also agreed to obtain within 21 days $3.1 million to be paid to KPMG on account of the costs and expenses of the liquidators, to fully repay all amounts owed to each of the banks and the bondholders by the group, to provide periodic updates on the sale process and to not implement the sale without the written approval of the CRO.

Despite the agreement between the China Fishery Group parties, HSBC, Bank of America and the other banks to remove and terminate the liquidators, the company said Fergal Thomas Power, Kris Beighton and Alexander Lawson have refused to instruct their Cayman Islands attorneys to consent to the termination and are refusing to be discharged unless the $3.1 million is immediately paid in full.

China Fishery said the terms of the consent order continue to render HSBC liable for the liquidators’ costs, and the undertaking from HSBC in favor of the liquidators will stay in place until the liquidators receive payment of the $3.1 million from the China Fishery Group parties.

Put options exercised

According to a separate Pacific Andes news release, Pacific Andes has received instructions from HSBC as principal paying agent and trustee of its S$200 million of 8½% bonds due July 30, 2017 that put options were exercised by various holders of the bonds in relation to S$186.13 million of the bonds.

Because of the recent uncertainty and instability faced by the company and its subsidiaries, including the inability of some key subsidiaries to obtain working capital and other financing for operations, Pacific Andes said it has notified HSBC of its inability to commit to making some requested payments, pending the development of a restructuring plan for the group.

These payments include interest on the principal amount of the bonds. The non-payment constitutes a potential event of default.

Pacific Andes said its board is seeking legal advice in connection with the put option exercise and the potential event of default and is in active dialogue with the bondholders with a view to establishing a process for discussions and communications.

China Fishery is a Hong Kong-based manager and operator of fishing vessels for coastal and deep-sea industrial fishing.

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