BOCHK among largest of Zhu Kuan's creditor banks
BOC Hong Kong (Holdings) (BOCHK) is among the largest of Zhu Kuan Group's 28 creditor banks which are owed a total HK$4.49 billion, a Zhu Kuan official has revealed.
The key investment arm of Zhuhai's city government is in a standoff with the banks, which have refused to take an 82 per cent haircut on their loans and threatened to start liquidation proceedings if the offer is not revised.
A Zhu Kuan debt-restructuring executive said BOCHK was one of its largest creditor banks, but did not give the amount of exposure.
Industry sources said most of BOCHK's loans were secured lending, meaning it would provide the bank with higher returns than unsecured lending.
BOCHK declined to comment.
Other Zhu Kuan creditors included ICBC (Asia), Societe Generale, Bank of America and Macau-based Tai Fung Bank, controlled by the family of Macau's Chief Executive Edmund Ho Hau-wah, the sources said.
BOCHK has been hit by a rush of negative publicity recently after it made loans to Shanghai tycoon Chau Ching-ngai, which triggered concerns over its lending practices.
A few years ago, the bank was the largest creditor in the US$5.59 billion debt restructuring for Guangdong Enterprises (Holdings) - the largest in Hong Kong's history.
The Zhu Kuan creditors had demanded 45 cents on a dollar back but had yet to receive a response, sources said.
Meanwhile, the banks are also quizzing accounting irregularities and share charges by the near-bankrupt window company as they seek to recover part of their money.
A HK$741 million liability to the Zhuhai municipal government that was 'overlooked'' in the group's accounts has in particular raised eyebrows.
According to sources close to the banks, a parcel of land was transferred to the group by the Zhuhai government in 1999 to enable the company to raise extra funds. But neither the asset nor the corresponding liability to the government were booked into Zhu Kuan's accounts, leaving HK$741 million due to the government.
The creditors were demanding to see the documents relating to the transfer 'and a satisfactory explanation of why the liability was overlooked in the group's accounts', a source said.
The banks also requested further details on the pledging of shares in Zhu Kuan Development, the group's Hong Kong-listed arm.
Sources said the group had pledged 235.2 million shares in Zhu Kuan Development to banks owed about HK$406 million. A further 337 million shares had been pledged to Longway Services Group for a debt of HK$250 million.
The group is understood to have agreed to share with Jiu Zhou Port Group the sale proceeds of a 90 per cent stake in Zhuhai Jiuzhou Port Passenger Traffic Service and a 49 per cent interest in Zhuhai Ferry. A HK$250 million debt arising from the deal was transferred to Longway. Creditors have demanded to see a copy of the agreement to determine whether the share charge was 'properly created'.
