Narrative
Full Description
Project narrative
China Fishery Group Ltd. — primarily through CFG Investments S.A.C. (CFGI) and Corporacion Pesquera Inca S.A.C. (Copeinca) — sources, harvests, on board-processes and delivers high-quality fish products to consumers around the world and engages in fishing, fishmeal and fish oil processing and production in Peru for worldwide distributions (the “Peruvian Business”). China Fishery Group Limited (Cayman) [CFGL] was incorporated by the Pacific Andes Group with the acquisition of approximately $600 million in Peruvian fishmeal assets. The China Fishery Group acquired Copeinca (which held a 10.7% quota for the anchovy harvest) in 2013 for an acquisition cost of approximately $1.04 billion. The acquisition of the China Fishery Group extended the Pacific Andes Group’s business into industrial fishing and included rights to fish in some of the world’s most lucrative fisheries, including the anchovy fishery in Peru. On March 20, 2014, three borrowers — China Fisheries International Limited (Samoa) (CFIL), CFG Investments S.A.C. (CFGI), and Corporacion Pesquera Inca S.A.C. (Copeinca) — signed a $650 million unsecured facility agreement with Coöperatieve Rabobank U.A., Standard Chartered Bank (Hong Kong) Limited, DBS Bank (Hong Kong), Limited, China CITIC Bank International Limited, and HSBC. The loan carried a 4-year maturity and it secured corporate repayment guarantees from N.S. Hong Investment (BVI) Limited, Smart Group Limited (an investment holding company and subsidiary of China Fishery Group Limited, organized under the laws of the Cayman Islands), and China Fishery Group Limited (Cayman) [CFGL)]. The borrowers were expected to use the loan proceeds to (a) assist with a corporate restructuring of the Peruvian Business, (b) pay off existing debt associated with the acquisition of the Peruvian Business, and (c) provide revolving credit to pay off other existing facilities. As of June 30, 2016, the principal amount outstanding under the unsecured facility agreement was $413 million. In April 2014, the borrowers defaulting on their repayment obligations. Then, between April 30, 2014 and November 11, 2015, the lenders that participated in the unsecured facility agreement with China Fisheries International Limited (Samoa) (CFIL), CFG Investments S.A.C. (CFGI), and Corporacion Pesquera Inca S.A.C. (Copeinca) entered into eight extension and waiver agreements relating to the obligations. On November 25, 2015, after the eighth Extension and Waiver Agreement lapsed, HSBC initiated an action in the High Court of the Hong Kong Special Administrative Region (the “Hong Kong Court”), seeking: (1) the winding up of CFGL and CFIL, and (2) the ex parte appointment of joint provisional liquidators. Following receipt of the application, the Hong Kong Court appointed Messrs. Beighton, Middleton, and Power of KPMG LLP to serve as the joint provisional liquidators for CFGL and CFIL (the “Hong Kong JPLs”). Based on the Hong Kong Court’s appointment of the Hong Kong JPLs, HSBC commenced a winding up petition against CFGL in the Grand Court of the Cayman Islands (the “Cayman Court”). HSBC sought the appointment of joint provisional liquidators for CFGL. Following a hearing on December 8, 2015, the Cayman Court appointed Messrs. Beighton, Power, and Lawson to serve as provisional liquidators over CFGL. CFGL and CFIL challenged the appointment of the Hong Kong JPLs in the Hong Kong Court. On January 5, 2016, following a multi-day trial, the court discharged and terminated the appointment of the Hong Kong JPLs (the “JPL Discharge Order”). Thereafter, the parties engaged in settlement discussions and eventually reached a resolution that they embodied in a Deed of Undertaking, dated January 20, 2016 (the “Deed of Undertaking”). Pursuant thereto, in consideration for HSBC’s withdrawal of the winding up petitions in Hong Kong and the Cayman Islands, and its agreement to discontinue its appeal of the JPL Discharge Order, CFGL and CFIL agreed, among other things, to pursue a sale of the Peruvian Business to be completed by July 15, 2016, and to the appointment of a Chief Restructuring Officer to oversee the sales process. CFGL and CFIL also agreed to pay $3.1 million to KPMG for the fees of the Hong Kong JPLs. The parties agreed that if CFGL or CFIL defaulted under the Deed of Undertaking, HSBC and Bank of America, N.A. (which was not a signatory to the Deed of Undertaking, but a beneficiary thereunder) were free to apply to the Cayman Court for the immediate reappointment of the Cayman JPLs. The commencement of CFGL’s and CFIL’s chapter 11 cases stayed enforcement of the Deed of Undertaking. China Fishery Group Ltd. -- and 15 of its subsidiaries -- filed for bankruptcy in the United States on June 30, 2016 (approximately two weeks before the July 15, 2016 deadline).”
Staff comments
1. In 1986, Swee Hong Ng and his sons (collectively, with others, the “Ng Family”) started a small frozen seafood trading business in the Western District of Hong Kong, which later became known as the Pacific Andes Group. Over the past 30 years, under the Ng Family’s management, the business has grown into a fully integrated global seafood and fishing enterprise. Today, the Pacific Andes Group consists of over 150 operating and non-operating entities and collectively is the twelfth largest seafood company in the world. It provides seafood products to leading global wholesalers, processors and food service companies and has operations across the seafood value chain. Id. In the early 1990s, the Pacific Andes Group grew rapidly and today, includes three public companies. 2. The precise value of China CITIC Bank International Limited’s contribution to the $650 million syndicated loan is unknown. For the time being, AidData assumes equal contributions ($130 million) across the five known members of the syndicate. This issue warrants further investigation.