China’s leading and longest-established, state-owned fishery company has found itself embroiled in a court case over unpaid loans taken by a prominent government run bank, in the latest twist to an acquisition gone wrong.
China National Fishery Co., known for its huge fleet of trawlers and its extensive processing operations, has announced to its shareholders that a case is being brought by the Industrial Bank of China against a subsidiary firm, Xin Yang Zhou, a processor based in the southern city of Xiamen.
The Xiamen branch of the Industrial Bank of China is demanding that Xin Yangzhou repay loan principal of CNY 15,039,100 (USD 2.3 million, EUR 2.1 million) and interest of 2,724,400 (USD 418,000, EUR 397,000). The legal dispute centres around the Industrial Bank’s provision of a loan and export bills to Xin Yangzhou.
The export bills were structured so that the bank offered credit to the company before the receipt of payment for its goods – an arrangement that’s common in China but recently under the spotlight as a slower economy and weaker export orders have put companies under financial pressure.
A CNFC statement to shareholders lists Xin Yangzhou and a related firm Xiamen Bo Lu Agricultural Products as defendants in the case. Also listed as defendants in the case are company executives Zhang Shenhui, Zhang Fuci, Zhang Shuzhu and Liang Shujiao.
The statement from CNFC warned its shareholders that the outcome to the court case – the hearing is set for March 29 – could have material bearing on the company’s profits for 2015. But this is only the latest twist to a saga that began when CNFC bought the firm in 2014. Xin Yangzhou – it also uses the English brand name Sunurt – carries the CNFC logo and lists among the company’s products convenience-themed shrimp products and pre-prepared seafood meals.
CNFC Overseas Fishery Co Ltd. – the name for the listed arm of CNFC – in January signed a letter of intent to transfer its 57 percent stake in Xin Yangzhou to its parent China National Fisheries Corp for CNY176 million (USD 27 million, EUR 24.5 million) – a significant mark down on the CNY220 million (USD 33.8 million, EUR 30.6 million) it paid for the firm. It indicated at the time that the reason for the transfer was irregularities around Xin Yangzhou-related properties and ownership of same. In turn, CNFC blamed the markdown on the transaction for poor 2015 results. CNFC Overseas Fishery Co. Ltd. has indicated it will report a net loss for 2015 of CNY 150 million (USD 23.1 million, EUR 20.7 million) compared to a profit of CNY 21.04 million (USD 3.23 million, EUR 2.91 million) for 2014.
Operating more than 250 vessels and transportation facilities in the Atlantic Ocean, Indian Ocean as well as the Pacific and Antarctic oceans, China National Fisheries Co. is China’s longest-running fishery company. Formerly known as the China Fisheries Joint Company, the firm started to sail into African waters in the mid-1980s, and today it has boats and docking facilities in almost a dozen nations, including Morocco, Senegal, Nigeria and Gabon.
This article appeared in Seafoodsource.com on March 11, 2016.