board to paper dealers in Hong Kong and China has collapsed, with the loss of hundreds of jobs in Hong Kong.

The Nasdaq Stock Market de-listed Bermuda-domiciled Concordia Paper (Holdings) Ltd. after a receiver had been appointed for the firm's principal operating subsidiary, Concordia Paper Ltd. (CPL).

Concordia's shareholders tried to negotiate standstill and restructuring arrangements with CPL's secured lenders over a $47.2-million term loan facility.

The main shareholders proposed a self-rescuing, debt restructuring package in which they would pump more money into CPL in return for the reduction of existing debts.

Although the self-rescue plan received initial support from most of the secured lenders and the unsecured bank creditors, the agent for the secured lenders -- the biggest single CPL creditor -- the Bank of Tokyo-Mitsubishi Ltd. (BOTM), rejected the plan.

On November 18, BOTM exercised its rights under the loan agreement for the term loan facility and placed CPL into receivership. Concordia chairman Albert Cheng commented: "We were shocked and saddened by this action which effectively terminated the employment of over 400 people and put stress on the wastepaper business in Hong Kong. There are social and environmental impacts from this receivership.

"The Directors of CPL are mindful of these consequences and have tried their utmost best to prevent a closure for the benefit of CPL's creditors, shareholders, employees, business partners and Hong Kong's environment.

"The self-rescue plan proposed by the company's principal shareholders could have saved CPL but unfortunately it did not receive unanimous support.'' Concordia had guaranteed CPL's loan obligations in May 1997 and a fixed charge was created over all the assets of Concordia in favour of the secured lenders.

Concordia said this week the charge has been registered by BOTM, as agent for the secured lenders, in Bermuda, the Concordia's country of domicile.

In August the company also entered into a guarantee agreement with The Hongkong and Shanghai Banking Corporation Ltd. (Hongkong Bank) in connection with the extension of an unsecured working capital facility to CPL subject to a maximum liability of HK$45 million.

On Friday, BOTM called in the loan guaranteed by Concordia for the full amount of $47.2 million, on behalf of the secured creditors.

And on Saturday Concordia received another demand note dated 21 November from Hongkong Bank demanding payment, also under its obligation as guarantor of CPL, of the total sums of HK$19,360,689.85 and US$2,946,209.33 owed by CPL.

As the mere holding company, Concordia's sole assets amounted to a paper machine.

On Monday, the board of directors met and declared the company insolvent and notified BOTM and Hongkong Bank that it could not pay the debts.

Concordia also announced the resignation of James Grant as a director effective November 18, and the seven other outside directors effective on November 30. The company now maintains a board of three directors.