Guangzhou, China-based aquaculture firm Sino Agro Foods is facing dire financial straits as it has reported significant write-offs and debt, and news it has been downgraded to trading on the OTC Markets Group Pink Sheets market.
In three separate mid-August filings with the U.S. Securities and Exchange Commission, Sino Agro – which is registered in the U.S. state of Nevada – reported continued delinquency in filing its 10-K forms for FY 2019 and FY 2020, as well as Form 10-Qs for 2020 and 2021. It will need to amend and restate filings going back to 31 December, 2019 to be able to apply to become a fully reporting company. It blamed COVID-related difficulties that have prevented its auditors getting from Hong Kong to the company’s operations in adjoining Guangdong Province.
Additionally, Sino Agro blamed COVID-related shortages in staff and supplies for a complete die-off of its fish at its farms in Guangdong Province, leading to a write-off of USD 104 million (EUR 88.4 million) in its 2020 accounts. Equally grim was the announcement that its shrimp farms in southern China – which it once touted as being among the largest indoor farms in the world – have been mothballed.
"Without sufficient workers, feed, supplementary medications, transportation, and maintenances to keep the livestocks going ... they all died during the period, calculating to multiple million pieces, equivalent to multiple of thousand metric tons," the company said in its Q1 update. "It is estimated that it will cost over USD
While the company flagged a modest surplus for the first half of 2021 due to its leasing of cattle-farming and fertilizer operations, its investors face grim prospects with the company’s aquaculture production bases now apparently non-operational. Sino Agro said it expects a loss of USD 16.3 million (EUR 13.9 million), primarily to the provision of written-off bad debts incurring losses of USD 17.7 million (EUR 15.1 million) in the first quarter of 2021.
Sino Agro has said in the past it’s in negotiations with global companies to develop several international aquaculture projects in Angola, India, Malaysia, and India. The company didn’t respond to questions from SeafoodSource on the current extent of its domestic and international operations.
Sino Agro was delisted from the Oslo Merkur stock exchange in 2019 due to violations of the exchange’s disclosure rules, and last year finalized a settlement with disgruntled shareholders who sued the company in March 2019 demanding a corporate governance overhaul.
The company could be one of the last of its kind to list in the U.S., given increased emphasis by U.S. authorities to hold Chinese firms to U.S. accounting standards – something opposed in recent decades by Chinese authorities on national security grounds.
The Holding Foreign Companies Accountable Act was enacted by the administration of former U.S. President Donald Trump in December 2020 to de-list Chinese companies from American exchanges if they fail to comply with U.S. auditing standards for three consecutive years. The bill’s sponsors in the U.S. Senate said their goal was to protect American investors.
Photo courtesy of Sino Agro Foods
