The founder of China Huishan Dairy Holding Co. has raised HK$355 million ($45.7 million) by selling part of his stake in Jilin Jiutai Rural Commercial Bank Corp., as the embattled company’s four-week reprieve on loan repayments draws to a close.
Yang Kai sold 76.7 million Hong Kong-listed shares of the bank on the Hong Kong Stock Exchange from March 28 to April 5, according to disclosure filings. After the transactions, his holding in the lender’s H-shares fell to 3.57 percent from 13.68 percent.
Yang is battling for Huishan’s survival after a series of events laid bare the extent of its money troubles. Its shares have been suspended since tumbling a record 85 percent on March 24, wiping out $4.1 billion of market value in less than 90 minutes. Four days later, Huishan revealed it had been late on some payments to its banks and been unable to contact one of its executive directors.
Government officials from Huishan’s home province of Liaoning convened a meeting on March 23 and asked its lenders to refrain from demanding immediate repayment, according to Hongling Capital, a P2P platform that brokered a loan to Huishan in February. Major creditors at the meeting, including Bank of China Ltd. and Jiutai Bank, expressed confidence in the dairy maker and said the firm would be able to repay overdue interest within four weeks, according to Hongling.
Jiutai Bank said on March 28 it has extended a total of 1.35 billion yuan ($196 million) in credit to Huishan and there have been no defaults on interest due. The lender said it will take necessary measures to ensure the security of the credit. Shares in the lender fell 0.4 percent on Tuesday.
Yang’s share sales come as the China Banking Regulatory Commission issued a notice saying it will crack down on bank shareholders who seek to take advantage of their influence by interfering with lenders’ operations, or benefiting from connected transactions.