March 28, 2024
Chinese pork producer Tech-Bank Food plunges amid debt woes, plans restructuring
Shares of Tech-Bank Food took a significant hit as the troubled Chinese pork producer announced plans for restructuring in response to mounting debts fuelled by declining pork prices, YiCai Global reported.
The stock price of Tech-Bank plummeted by 7.4% to CNY 2.87 (US$0.40), marking a nearly 22% decrease from the beginning of the year.
In a statement, the Shanghai-based company disclosed that it held a board meeting where a resolution was passed to initiate pre-reorganization and in-court restructuring. Shareholder approval is still pending for this course of action.
Tech-Bank becomes the third listed swine farmer in China to unveil restructuring plans since the onset of the pork price downturn two years ago. Zhengbang Technology completed its reorganisation late last year, while Aonong Biological Technology Group commenced the process last month.
According to Tech-Bank, the restructuring aims to optimise asset and liability structures and enhance the company's capacity to sustain operations and profitability. Failure to execute the plan could result in bankruptcy, the firm cautioned.
Despite enduring significant losses in its core business over the past three years due to declining pork prices, Tech-Bank believes that restructuring is a worthwhile endeavour. The company asserts that its comprehensive industrial layout positions it to continue operations despite the formidable liabilities it faces.
In its forecast released in January, Tech-Bank anticipated a net loss ranging from CNY 2.6 billion to CNY 2.9 billion (US$361.1 million to US$402.8 million) for the previous year. However, in 2022, the company still managed to achieve a net profit of CNY 489 million (US$67.9 million).
As of September 30, 2023, China had four additional listed companies in the sector with debt-to-asset ratios exceeding 70%. These included New Hope Liuhe, Huatong Meat Products, Kingsino Technology, and New Wellful.
- YiCai Global
