Chaoda Modern Agriculture, a Chinese vegetable supplier that’s been suspended from trading since 26 September, has sold most of its shares in the country’s largest citrus plantation owner Asian Citrus Holdings.
Chaoda has agreed to sell 100m shares in Asian Citrus, equivalent to an 8.2 per cent stake, at HK$4.66 each. The sale of the stake, worth HK$455m (US$59.8m), reduces Chaoda’s holding in the company to 5.4 per cent.
Chaoda Modern, which has been mired in fraud allegations, cited market volatility as the reason for the large sell-down. Its associations with Asian Citrus at a shareholding level and in terms of supplying fertilisers to the company, appear to have affected the citrus giant’s shareprice this year. On 30 September, when Chaoda Modern announced it would be delaying publication of its annual report, following the suspensions of trading in its shares, Asian Citrus shares fell to a two-year low of 24.08p in London.
Last month Asian Citrus announced it would not renew a fertiliser agreement with Chaoda Modern’s subsidiary, Fujian Chaoda Group, which is owned by Chaoda chairman Kwok Ho, when it expires on 30 June. The move to sever ties helped to revive shares in Asian Citrus. And Chaoda’s decision to cut its stake in the group appeared to further buoy shares last week.
Chaoda’s vice-chairman and non-executive director Ip Chi Ming is also a director on the board of Asian Citrus Holdings and it remains to be seen whether the sale will prompt him to step down from that role.
For its part, Chaoda may book a loss of HK$91m (US$12m) after the sale of its 100m Asian Citrus shares, the company said in a regulatory filing last Wednesday.
Chaoda delayed its annual earnings release last month to audit its accounts following a report from Anonymous Analytics questioned the company’s finances. The delay led Standard & Poor’s Ratings Service and Moody’s Investors Services to cut their credit ratings on the company. Chaoda said the funds from the share sale would be used for “general working purposes”.
Chaoda is due to hold its annual general meeting on Friday (30 December) at the Grand Hyatt Hotel in Hong Kong.
