China Fishery: Provisional liquidators discharged

Singapore

FINANCIALLY beleaguered China Fishery Group on Monday said that its provisional liquidators have been discharged, and the control of the company has been returned to the board.

Following the order of the Cayman Islands Grand Court, the winding up petition and summons filed by the joint provisional liquidators have also been dismissed.

This followed action in the Hong Kong High Court, which in January also put a halt to the liquidation process after three of the company's lenders agreed to support the case for the company not to be wound up.

But tragedy for the company seems far from over. On Monday, Standard & Poor's Ratings Services (S&P) lowered its long-term corporate credit rating on China Fishery to "D" (default) from "SD" (selective default).

This came after China Fishery missed a coupon payment on the US$300 million senior unsecured notes due 2019 that it guarantees. The coupon payment of about US$14.63 million was due on Jan 30, 2016.

At the same time, the credit rating agency lowered its long-term issue rating on the senior unsecured notes due 2019 to "D" from "CC" (ie, currently highly vulnerable). S&P also lowered its long-term Greater China regional scale ratings on China Fishery to "D" from "SD".

It also downgraded the outstanding notes to "D" from "cnCC". (This latter rating means that it is currently highly vulnerable to non-payment; it is used when a default has not yet occurred, but S&P expects default to be a virtual certainty.)

China Fishery is a fishing company with operations in Peruvian, African and Russian waters.

S&P credit analyst Lillian Chiou said: "We do not expect China Fishery to make the payment within the 30-day grace period, given that the company may need to reserve all available cash to fund its fishing operations in Peru." She added: "We also do not believe the company will pay its other debt obligations, given its tight liquidity position."

All of China Fishery's banking facilities are at a standstill, and it has no additional liquidity support, S&P said.

It added that China Fishery's operating performance is expected to continue to deteriorate over the next 12 months, with revenue for its fiscal 2015 (ended September) dropping 30-35 per cent year on year.

This is due to the adverse weather conditions that have affected fishing catches in Peru, significantly reduced sales from the fish supply business in Russia, and still-weak operations in Namibia in south-west Africa.

S&P also expects revenue growth in fiscal 2016 to remain flat, given the impact of El Nino on the 2015 "Season B", and possible delays in fishing activities, given the company's liquidity distress.

Its shares have been suspended from trading since the company's creditors succeeded in pushing for provisional liquidators to be appointed, in the wake of China Fishery's inability to pay its debts. It last traded on Nov 25, 2015, at S$0.076.