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[HONG KONG] Fitch Ratings says that China Fishery Group Limited's (China Fishery, Issuer Default Rating: C) failure to pay a coupon on its US$300 million notes on Jan 30, 2016 does not immediately trigger a downgrade to 'RD' as the company has a 30-day grace period to make the payment, under the terms of the notes.
The company is facing a cash crunch as its access to funding has been curtailed following a winding up petition against the company by creditors initiated in November 2015.
The company announced on Feb 1, 2016 that courts in Hong Kong and Cayman Islands have dismissed the winding up petitions and discharged the provisional liquidators that had been in place.
The company also announced that it had reached an agreement with its club loan lenders to restructure the company and continues to explore a potential sale of its Peruvian business. According to the company's announcement in December 2015, it had received non-binding memorandums of understanding from two prospective buyers for the Peruvian business at an indicative enterprise value of US$1.7 billion.
Despite these developments, it is not clear whether the company's financial position would improve in time for it to make the coupon payment within the grace period. Failure to do so will result in its IDR being downgraded to 'RD'. We also believe that the company had not met all the terms of the club loan; however, we have not been able to verify whether this constitutes a default.