(Yicai Global) March 28 -- Shares in Zoneco surged by the exchange-imposed limit today after the major Chinese seafood supplier said that Dalian Salt Chemical Group, operator of one of China’s ‘Big Four’ sea salt farms, has won the bidding for a majority stake at a price of CNY343 million (USD53.8 million).

Zoneco’s share price [SHE:002069] was trading up 10 percent at CNY4.58 (USD0.72) as of 2 p.m. China time today.

Zoneco has accepted Dalian Salt’s offer of CNY3.12 (USD0.50) per share, a 30 discount on today’s trading price, for around 110 million shares, equivalent to a 15 percent stake in the Dalian, northeastern Liaoning province-based company, according to a notice posted on the China Beijing Equity Exchange website on March 26.

After the transaction is complete, state-owned Dalian Salt will be the biggest shareholder, and the holdings of former owner Zhangzi Island Investment and Development Center of Changhai County will be diluted to 7.04 percent from 22.5 percent.

The capital injection will be very welcome as Zoneco, which was convicted of financial fraud in 2020, continues to be sued by investors who were affected by the false financial statements. The firm has been embroiled in 529 civil lawsuits involving CNY110 million (USD17.3 million) and more are expected to join in, it said on March 11.

Zoneco was fined CNY600,000 (USD84,750) by regulators in June 2020 for declaring years of huge, fishy losses. In October 2014 it said it had scrapped over CNY1 billion in scallop stocks. In January 2018 it claimed another food shortage had started CNY630 million worth of the shellfish to death. Another CNY300 million worth mysteriously perished in 2019.

It is extremely difficult to know how many of these bottom dwellers are available in a specific area of the sea as they cannot be seen with the naked eye. It was only through use of top of the range technology, such as Big Data and cloud computing, that regulators were able to expose Zoneco’s fraud.

Zoneco is also expecting net profit to fall as much as 59.5 percent in 2021 from the year before to CNY6 million (USD941,139), as the Covid-19 pandemic and the international trade situation have greatly affected its import and export business, the company said in its annual results forecast in January.

174-year-old Dalian Salt is the biggest seawater enterprise in northeast China with assets of CNY5 billion (USD784.7 million). It mainly engages in seawater salt production, mariculture, seawater chemical industry and sea salt culture and tourism.

Editor: Kim Taylor