Hong Leong Asia assigns Xinfei's debt to Chinese buyer for 48.7m yuan

HONG Leong Asia (HLA) has assigned the shareholders' loan and other advances it previously granted to its consumer products unit - the Xinfei companies currently undergoing restructuring - to a buyer in China specialising in the acquisition of non-performing assets, for RMB48.7 million (S$10 million).

The debt had remained outstanding in 2018 when it had deconsolidated the business.

With the assignment of debt and earlier rounds of disbursements to creditors in 2018, the recovery rate for the group is now about 10.9 per cent, it said.

HLA had said earlier that the restructuring plan was expected to raise the recovery rate from 1.51 per cent to 9.82 per cent for creditors under various liquidation scenarios for Xinfei.

In view of uncertainty over the final recovery rate, full provision was made in the group's FY18 accounts, assuming zero recovery rate for the debt.

HLA had stated that any recovery in the future would be treated as income.

As a result of the debt assignment, HLA will recognise about RMB48.7 million as income, before the deduction of any related costs.

The assignment is thus expected to have a positive impact on its net asset value per share and earnings per share in FY21.