April 3, 2017 / 2:42 AM / 2 years ago

China Huishan directors quit, files report on missing executive

HONG KONG (Reuters) - China Huishan Dairy Holding Co Ltd (6863.HK) said late on Friday that four independent directors had quit and an executive remained missing, warning shareholders it would need more time to check its financial position before updating the market.

Logo of Huishan Dairy is seen on their office building in Shenyang, Liaoning province, China March 25, 2017. Picture taken March 25, 2017. REUTERS/Stringer

China Huishan, whose shares have been suspended after an 85 percent drop in a single day last month, said executive director Ge Kun, who ran treasury operations for the group, remains uncontactable. It has now filed a missing person report with Hong Kong police.

Huishan grabbed headlines last year when it sold and leased back part of its herd, but its most recent troubles have laid bare risks of excess leverage and financial engineering in unexpected quarters of corporate China.

Huishan said in Friday’s statement that a Hong Kong court had rejected an application by one of its creditors, Gopher Asset Management Co. Ltd, to freeze assets of the company, its controlling shareholder Yang Kai and his wife.

Huishan has denied reports of fraudulent invoices and stolen cash, but last week laid out the depth of its unfolding crisis, including that almost all of the shares owned by its controlling shareholder had been pledged as collateral.

Trading in the company’s shares remains suspended pending further statements. It expects to update the market next week.

Reporting by Donny Kwok; Editing by Stephen Coates

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