Liquidators Appointed for Peace Mark
William George Shuster, Senior Editor -- JCK Online, 9/16/2008 9:07:00 AM
Peace Mark (Holdings) Ltd., an international Hong Kong-based watch and jewelry company and watch retailer, has been put under oversight of “provisional liquidators” (similar to bankruptcy administrators), following two turbulent months that saw the company suspend trading on the Hong Kong Stock Exchange, lenders demand repayment, and loss of a major loan.
Peace Mark’s situation, said the “South China Morning Post” of Hong Kong, is “the latest sign [that] lenders are becoming tougher with debtors amid the worsening economic slump.”
Appointment of provisional liquidators—approved by the company and its major creditors—gives Peace Mark temporary relief from creditors’ demands, while they and management try to solve its financial woes and avoid liquidation.
One possibility at press time was investment or even buyout by a U.S. private equity group, said Hong Kong press reports.
Peace Mark, founded in 1983, is a major watch manufacturer, distributor, and fine watch retailer, with offices and markets in the United States, Europe, China, and other Asian countries. It has production facilities in China (Hong Kong, Shenzhen, Guangzhou, and Shanghai) and Bienne, Switzerland; about 1,000 points of sale in Asia; 5,000 employees in China and abroad, and annual earnings of about $900 million.
Peace Mark also has exclusive rights to operate De Beers retail stores in China and to develop the market there for the French high-end jewelry brand Boucheron. A 2006 joint-venture with Tourneau, America’s largest watch retailer, is developing a chain of retail stores (30 by 2011) operating under the Tourneau name to sell mid-range and luxury watch brands in mainland China, Hong Kong, Macau and Taiwan. Tourneau officials, when contacted by JCK about Peace Mark’s situation, had no comment at this time.
Early this year, after purchase (for a reported $368 million) of Sincere Watch, a southeast Asian fine watch retail chain based in Singapore, Peace Mark secured a $201 million loan (HK$1.56 billion) from some international banks, say press reports, to refinance existing loans. However, Peace Mark’s stock on the Hong Kong Exchange began dropping--led by speculation about its financial situation--falling 73 percent from a year ago by Aug. 11. On Aug. 18, while denying the rumors, the company suspended trading its stock. In late August, an English private equity firm withdrew its offer of a buyout.
In early September, Peace Mark announced it couldn’t meet banks’ demands to repay $156 million (HK$1.216 billion) of its debt. The earlier loan was canceled by the lenders, making it difficult for Peace Mark to repay existing loans and prompting demands from other bank and creditors.
On Sept. 11, two provisional liquidators from the Asian accounting group Ferrier Hodgson, which specializes in corporate recovery and insolvency, were assigned to Peace Mark at the request of some banks, “following a lack of confidence in the ability to undertake a restructuring” at the company, Ferrier Hodgson executive director Rob Sutton told Reuters news service. A Ferrier Hodgson news release said it was "undertaking an urgent assessment of the financial position and operations of Peace Mark in consultation with local management, creditors and other stakeholders in order to determine the optimal strategy for the business."
At press time, Hong Kong media reported Peace Mark was having “talks” with a private U.S. equity investment firm about a possible investment or buyout.
