Guangzhao Industrial Forest suspends trading, cites DEFAULT RISKS

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(XFN-ASIA) - Singapore-listed Guangzhao Industrial Forest Biotechnology Group said it has suspended trading amid a steep decline in its share price, adding that a prolonged suspension has raised the risk of default on a convertible notes issue.
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Guanyu said…
(XFN-ASIA) - Singapore-listed Guangzhao Industrial Forest Biotechnology Group said it has suspended trading amid a steep decline in its share price, adding that a prolonged suspension has raised the risk of default on a convertible notes issue.

The tree-growing company halted trading after its share price fell around 55 pct over two days last week. It said it could default on convertible notes if its stock keeps falling or if it suspends shares for too long.

Liberty Harbor LLC holds the 8 mln usd worth of unsecured, convertible notes in the company due 2011.

As of last Friday, when the company halted trade, the stake held by major shareholders, including Hireach Assets Ltd, Song Xuemeng and Su Min, declined to around 31.8 pct as a result of "involuntary sales by financial institutions," the company said in a statement to the exchange.

Guangzhao Industrial said that if major shareholders no longer hold the single largest combined stake or less than 25 pct of ordinary shares or if the company suspends shares for 14 straight days, the note holders have a right to redemption.

"If either of the above events occurs and the note holders decide to redeem, at present, the company does not have the financial resources to repay the notes in full," the Guangzhao Industrial said.
The company said management is in talks with Liberty Harbor.
September 19, 2008 at 1:27 PM
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