Bellamy’s has extended its trading halt as it digs deeper into the reasons why China suspended accreditation for the company’s newly acquired milk powder plant.
The trading halt had been due to be lifted today, but has been extended to July 24.
The organic infant formula maker, whose sales to China hit a speed bump due to regulatory changes, says it understands a complaint was made relating to “historical filing and records” of Camperdown Powder Pty Ltd.
Camperdown’s CNCA (Certification and Accreditation Administration of the People’s Republic of China) was suspended soon after Bellamy’s closed the purchase of the Victorian business.
The licence was seen as a key strategic acquisition, a trouble free route to the China market for Bellamy’s. The company paid $28.5 million for an indirect 90% interest in Camperdown Powder.
Last week the company raised $60 million in an equity offer to restructure and future proof itself from changes in regulations in its biggest market, China.
Today Bellamy’s announced that China authorities have not made any findings against Camperdown and none of the enquiries raised relate to microbiological or contamination issues.
“Bellamy’s understands that the enquiries raised by CNCA were as a result of allegations received by CNCA from a third-party complainant relating to historical filing and records and to certain previous quality issues relating to Camperdown’s processing facility,” the company said.
Bellamy’s says the suspension of Camperdown’s CNCA registration does not impact current production or sale of its Australian label or Chinese label products. It relates only to the manufacture of third-party products at the Camperdown facility.
“We are working closely with Australian trade officials to respond to CNCA’s enquiries,” says CEO Andrew Cohen.
Bellamy’s spectacular growth via China suddenly stalled late last year following regulatory changes.
The fallout from falling sales claimed the scalp of CEO Laura McBain, stripped millions of dollars from the market capitalisation and sparked a shareholder revolt which ended with a change in the board of directors.
The company in February posted a 47% drop in first half profit to $7.236 million following problems with sales of its organic infant formula in China.
Bellamy’s is forecasting a 2017 EBIT (earnings before interest and taxes) loss of $9.5 million to $14 million.