SHANGHAI/HONG KONG • China Huishan Dairy Holdings said yesterday it had fallen behind with some loan repayments, was unable to contact a key finance executive and expressed concern about the strength of creditor support after its stock price plummeted.

But the country's largest integrated dairy firm, which has been on the back foot since a December attack by US-based short-seller Muddy Waters, denied media reports that funds had been misappropriated.

Its shares fell 85 per cent last Friday after the reports were released, wiping US$4 billion (S$ 5.58 billion) off its market value.

Underscoring the depth of its unfolding crisis, Huishan's filings also showed that most of the shares owned by its controlling shareholder had been pledged as collateral and that the board was seeking clarity on its financial situation.

After finding it had been "late in some bank payments", Huishan's chairman Yang Kai asked the regional Liaoning government for support and met 23 creditor banks last week to ask for loans to be rolled over.

While creditors had shown support then, the sudden share drop had raised concerns they may no longer be willing to roll over loans and that banks holding its shares as collateral had sold or could sell the stock because of the price decline.

"Given the significant decrease in share price of the company and the recent media reports, there is no assurance that such banks' (supportive) views would remain unchanged," it said.

Huishan's controlling shareholder, a firm called Champ Harvest which owns 70.8 per cent of its stock and is majority held by Mr Yang, has pledged nearly all of the shares to secure loans.

REUTERS