Asset sale imminent for Fonterra partner

Fonterra’s financially troubled Chinese investment partner Beingmate has seen its share price tumble 10 per cent amid news it will make an imminent announcement about an asset sale.

Share trading has been suspended until details of the asset sale are revealed in the next few days.

In 2015 Fonterra signed off on a deal to invest $700 million for an 18.8 per cent stake in the company, which it said would give access to the lucrative Chinese market for its infant formula and other products.

Fonterra confirmed that Beingmate Infant & Child Ltd had indicated its intention to sell major assets to its controlling shareholder, Beingmate Group Co. Ltd.

‘‘In keeping with listing regulations, while the details of the transaction are being [formed/ finalised], Beingmate I&C Co. Ltd have applied to the Shenzhen Stock Exchange for a suspension of share trading. This also safeguards existing investor interests, in the event of any related share price fluctuations,’’ Fonterra said in a statement.

Beingmate has been beset by financial problems, reporting a loss of $158m last year, compared with a profit of $20m in 2015. Late last year its reputation was hit by a case of alleged milk powder tampering, causing it to forecast a loss of up to $48 million for the first quarter of this financial year.

An authorised Beingmate infant formula dealer had been linked to a ring that bought cheaper powder and repackaged it so it appeared to be a more expensive product.

Adding to its woes, a number of senior employees have departed the company in the last six months, including a director, vicepresident and chief financial officer Shen Lijun.

First NZ Capital head of derivatives Mike McIntyre confirmed the possibility of an asset sale, with an announcement to be made soon.