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Thursday 17 September 2009
Beauty China not appealing against winding-up order
Cosmetic company Beauty China Holdings is headed for liquidation as it will not be appealing against the winding-up order made by the High Court in Hong Kong.
Beauty China not appealing against winding-up order
Executive directors to meet official receiver in HK
By LYNETTE KHOO 17 September 2009
Cosmetic company Beauty China Holdings is headed for liquidation as it will not be appealing against the winding-up order made by the High Court in Hong Kong.
Its lead independent director Low Wai Cheong told BT that the executive directors will meet the official receiver in Hong Kong next week to clarify what can be done to preserve value in the company.
‘We are unable to assess whether shareholders will likely be able to get back anything at this moment,’ he said. ‘This will depend very much on the speed by which the liquidator could dispose of the assets of the company, the manner of disposition (whether as a going concern or piece meal), the success rate of collecting receivables and the price offered by potential buyers.’
Beauty China has a China-incorporated subsidiary in Zhuhai which produces cosmetic skin-care products with a registered capital of HK$70 million (S$12.9 million).
Mr. Low said that the factory in Zhuhai is not the subject of the winding-up order but it has been mortgaged to a Chinese bank for a loan.
Investors could not cash out on Beauty China shares as trading has been suspended on Singapore Exchange since March pending the release of more updates on its financial position, a potential stake sale by its chairman Wong Hon Wai, and potential new investors.
Mr. Wong’s stake sale, however, did not materialise. And Beauty China ended up with a net loss of HK$328.16 million instead of a profit after major adjustments to its FY2008 results. This was soon followed by further losses in the first two quarters this year as sales dropped drastically and the group had to make provisions for receivables.
Last week, the Hong Kong court ordered Beauty China to wind up. It owed a total of more than HK$145 million to petitioners of the winding-up order under a syndicated loan and to another creditor, Standard Chartered Bank.
Though the group is not registered in Hong Kong but incorporated in the Cayman Islands, the judge ruled that the court has jurisdiction as Beauty China has sufficient connection with Hong Kong.
The judge threw out the company’s argument that it has no business and assets in Hong Kong, and that its Hong Kong address is only for correspondence. Based on its annual report for fiscal 2007, the Hong Kong office is a ‘head office’ and ‘principal place of business’.
Two of its wholly owned subsidiaries - Colour Zone HK and Kist Trading - are incorporated in Hong Kong and audited by Hong Kong auditors.
The court rejected Beauty China’s request for a further six-week adjournment for a potential investor to complete its due diligence as the petitioners told the court that they were not interested to consider any new proposal.
Since the petitioners and Standard Chartered Bank are in the position to block any resolution required for restructuring through a scheme of arrangement, the judge ruled that no purpose would be served by adjourning the petition.
The petitioners, led by Industrial and Commercial Bank of China (Asia), had earlier considered and rejected a restructuring plan proposed by the company’s financial adviser BNP Paribas in August.
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Beauty China not appealing against winding-up order
Executive directors to meet official receiver in HK
By LYNETTE KHOO
17 September 2009
Cosmetic company Beauty China Holdings is headed for liquidation as it will not be appealing against the winding-up order made by the High Court in Hong Kong.
Its lead independent director Low Wai Cheong told BT that the executive directors will meet the official receiver in Hong Kong next week to clarify what can be done to preserve value in the company.
‘We are unable to assess whether shareholders will likely be able to get back anything at this moment,’ he said. ‘This will depend very much on the speed by which the liquidator could dispose of the assets of the company, the manner of disposition (whether as a going concern or piece meal), the success rate of collecting receivables and the price offered by potential buyers.’
Beauty China has a China-incorporated subsidiary in Zhuhai which produces cosmetic skin-care products with a registered capital of HK$70 million (S$12.9 million).
Mr. Low said that the factory in Zhuhai is not the subject of the winding-up order but it has been mortgaged to a Chinese bank for a loan.
Investors could not cash out on Beauty China shares as trading has been suspended on Singapore Exchange since March pending the release of more updates on its financial position, a potential stake sale by its chairman Wong Hon Wai, and potential new investors.
Mr. Wong’s stake sale, however, did not materialise. And Beauty China ended up with a net loss of HK$328.16 million instead of a profit after major adjustments to its FY2008 results. This was soon followed by further losses in the first two quarters this year as sales dropped drastically and the group had to make provisions for receivables.
Last week, the Hong Kong court ordered Beauty China to wind up. It owed a total of more than HK$145 million to petitioners of the winding-up order under a syndicated loan and to another creditor, Standard Chartered Bank.
Though the group is not registered in Hong Kong but incorporated in the Cayman Islands, the judge ruled that the court has jurisdiction as Beauty China has sufficient connection with Hong Kong.
The judge threw out the company’s argument that it has no business and assets in Hong Kong, and that its Hong Kong address is only for correspondence. Based on its annual report for fiscal 2007, the Hong Kong office is a ‘head office’ and ‘principal place of business’.
Two of its wholly owned subsidiaries - Colour Zone HK and Kist Trading - are incorporated in Hong Kong and audited by Hong Kong auditors.
The court rejected Beauty China’s request for a further six-week adjournment for a potential investor to complete its due diligence as the petitioners told the court that they were not interested to consider any new proposal.
Since the petitioners and Standard Chartered Bank are in the position to block any resolution required for restructuring through a scheme of arrangement, the judge ruled that no purpose would be served by adjourning the petition.
The petitioners, led by Industrial and Commercial Bank of China (Asia), had earlier considered and rejected a restructuring plan proposed by the company’s financial adviser BNP Paribas in August.
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