Zoneco shareholder forced to sell partial stake to pay off company debt
Zoneco Aquatic, once the most valuable seafood firms listed in China, has been ordered to sell 110 million shares held by its main shareholder, Changhai County Zhangzidao Investment and Development Centre. The move will reduce its share from 22.5 percent to 7 percent after the 25 March auction.
Chinese authorities have ordered the sell-off to pay off Zoneco’s debts, which have mounted after several die-offs of its scallop crop and punishment from China’s stock market regulator for inaccurate filings on its aquaculture reserves. Zoneco’s troubles started in 2014, when the firm booked huge losses on what is said was a die-off of its marine shellfish stocks due to extreme temperatures. The company has subsequently faced a string of legal cases brought by investors.
The company’s shares are currently worth CNY 3.90 (USD 0.62, EUR 0.54) – a fraction of the CNY 100 (USD 16, EUR 14) the shares were worth at their peak in 2008, or even the CNY 9.65 (USD 1.54, EUR 1.35) each share sold for in January 2016.
Zoneco, which is also known as Zhangzidao, has projected profits of CNY 6 to CNY 9 million (USD 950,000 to USD 1.4 million, EUR 871,000 to EUR 1.3 million) for 2021, a far cry from the CNY 691 million (USD 110 million, EUR 96.7 million) in profit it reported in 2011 or the CNY 96.9 million (USD 15.5 million, EUR 13.5 million) net profit on CNY 2.6 billion (USD 416 million, EUR 364 million) in revenue it recorded in 2013.
Zoneco’s troubles have also scared international investors from taking stakes in Chinese aquaculture firms. Investors initially flocked to the company buoyed by its business model of shellfish farming and distribution of high-end imported seafood. The firm also at one stage branched out to real estate and tourism and counted among its shareholders the state-owned financial services firm Ping’An as well as the Shanghai-based Aegon Industrial Fund Management Co., whose European-based subsidiary owns a 49 percent stake in Zoneco.
Photo courtesy of Zoneco