Bank of China provides a loan for the acquisition of Kresta Holdings Limited

Project narrative

On June 9, 2014, Suntarget (Hong Kong) Trading Co Limited — a wholly owned subsidiary of Chinese publicly-traded firm Ningbo Xianfeng New Material Co., Ltd (APlus) — announced that it intended to purchase all issued shares (100%) of Australian window furnishings provider Kresta Holdings Limited (KHL) for a consideration of $0.23 AUD per Kresta share, or about $34.6 million AUD. Suntarget formally announced the offer on July 14, 2014; the offer to purchase the shares from the shareholders of Kresta was open from July 29, 2014 to August 29, 2014. Ultimately, at the close of the offer, Suntarget had purchased 84.35% of Kresta's issued shares. To support this acquisition, Bank of China (BOC) issued a loan. At the time of the acquisition, Kresta was the largest window coverings (blinds and curtains) manufacturer and retailer in Australia and New Zealand. Previously, in December 2013, Suntarget had bought a 13.88% stake in Perth-based Kresta Holdings, and by July 2014, it had held a 19.9% stake. Chinese businessman Lu Xianfeng, the majority shareholder of Ningbo Xianfeng, had also recently become Kresta's managing director by the time of the acquisition. Suntarget stated that it wished to acquire more business over Kresta and improve its opportunities, and intended to maintain Kresta's 700-person workforce and operations in Australia. After the completion of the acquisition, Kresta ran into operating issues, namely due to its low margins and high costs. It had a net loss of $10 million AUD in 2017 and a decline in revenue of $10 million AUD. In 2018, it closed its Malaga manufacturing plant in Western Australia, leaving only an assembly plant in Queensland as its sole Australian production facility, in favor of offshore manufacturing. On December 28, 2018, Van Dairy (Hongkong) Group Limited, whose major shareholder is Ningbo Kaixin Investment Co., Ltd, a Ningbo-based special purpose vehicle established by Lu Xianfeng, signed a letter of intent to acquire the 84.35% stake in Kresta from Suntarget; the share sale and purchase agreement was then signed on March 15, 2019. In 2016, Lu Xianfeng had acquired Australian dairy Van Diemen’s Land Company (VDL) for $280 million AUD ($200 million USD), using a $74 million USD loan to Kaixin Investment from the Industrial and Commercial Bank of China, as captured by Record ID#93354.