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(In Liquidation)
FU JI Food and Catering Services Holdings Limited
Bondholders’ Meeting
23 October 2009
Disclaimer
This Report has been prepared by the Joint and Several Liquidators of Lehman Brothers Commercial Corporation Asia Limited (In Liquidation) for the
Bondholders of Fu Ji Food and Catering Services Holdings Limited, based on information currently available from various public sources. It is prepared for the
sole purpose of facilitating initial discussions.
This Report should not be relied upon by any other person, or for any other purpose, or used in any other context, including but not limited to trading in the
Company’s securities. This Report has been released on a confidential basis and it should not be copied, referred to or disclosed, in whole or in part, without
the prior consent of the Joint and Several Provisional Liquidators of Lehman Brothers Commercial Corporation Asia Limited (In Liquidation).
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 1
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited (“the Company”)
Events leading to winding up
On 29 July 2009, the Company announced a delay in the publication of the annual report. HKSE suspended the trading of the Company’s
shares and convertible bonds on the same day. Subsequently, the Company announced further delays on 25 August 2009 and 22 September
2009 respectively.
On 30 September 2009, the delay in publishing annual reports resulted in technical defaults under the Company’s convertible bonds and bank
facility agreements.
On the same day, one of the Company’s Independent Non-executive Directors, Dr Tsui Wai Ling Carlye, resigned, citing lack of open
communication from the management as the cause.
On 7 October 2009, Deloitte was appointed as the Independent Financial Advisors.
On 17 October 2009, the board filed a winding-up petition and the Court appointed Deloitte as the Provisional Liquidators.
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 2
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited
Current Situation
Cash Positions
Cash positions declined dramatically. As of petition date, the remaining bank deposits were as follows, excluding
pledged deposits.
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 3
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited
Current Situation (Continued)
Supplier concerns
There are indications that certain suppliers are very concerned with the Company’s financial position and have
stopped delivery.
Massive layoffs
Laid off 5,500 of its 8,500 employees in the past year.
Some laid-off employees organized strikes in the factories and business premises, interfering day-to-day operations.
Management hemorrhage
During the past year, key management level staff resignations included vice president, sales director, head of
investment department, general manager of processing factory, head of convenience food division, head of legal
department and head of human resources department.
Sales Department – fourteen out of fifteen managerial staff left the Company
With 15 legal proceedings against the Group in the PRC, some assets have been frozen by the PRC court.
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 4
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited
Summary of Liabilities
Other Liabilities
Suppliers RMB 93 14
Construction Contractors RMB 149 22
Landlords of business/ factory premises RMB 32 5
Source: Affirmation of Wong Chi Keung, independent non-executive director of FU JI Food and Catering
Services Holdings Limited, filed with the High Court of HKSAR.
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 5
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited
Issues Facing the Bondholders
Building a united and focused strategy to optimize recovery to Bondholders through the Liquidation process
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 6
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.
FU JI Food and Catering Services Holdings Limited
Appendix: Revenue and Operation Profit by Segment
Financial information
(Amounts in Millions) For the 6 months For the 12 months
ending Sept 2008 ending Mar 2008
RMB USD RMB USD
Segment Revenue
Catering Services business 959 140 1,383 202
Chinese Restaurants business 152 22 275 40
Theme Restaurants business 260 38 191 28
Convenience Food and other 17 3 66 10
Total Revenue 1,387 203 1,916 280
Segment Income
Catering Services business 309 45 459 67
Chinese Restaurants business 27 4 50 7
Theme Restaurants business 56 8 41 6
Convenience Food and other (14) (2) (16) (2)
Other Income 22 3 46 7
Profit from operations 401 59 581 85
© 2009 KPMG, a Hong Kong partnership and a member firm of the KPMG network of independent member firms affiliated with 7
KPMG International, a Swiss cooperative. All rights reserved. Printed in Hong Kong.