NEW YORK – AgFeed Industries Inc.’s board of directors has established a special committee to investigate the accounting relating to certain company Chinese farm assets (acquired during 2007 and 2008) used in its hog production business, as well as the validity and collectability of certain of the company's accounts receivables relating to its animal nutrition business in China and any other issues that may arise during the course of the investigation.
Members of the special committee include directors Milton Webster, III and newly appointed director Bruce Ginn. The special committee is authorized to retain experts and advisers to carry out its investigation and has engaged Latham & Watkins LLP to serve as its independent counsel in connection with the investigation.
The company said it won’t provide further comment regarding the matters under investigation until after the special committee concludes its investigation.
In other news, the board of directors appointed Bruce Ginn as a director. Ginn has extensive experience in the agriculture and livestock industries. He is currently a partner at BMI Ag Services, an agriculture holding and consulting company that focuses on livestock production and sales and operates pork processing companies, and chief executive officer of the Kansas City Sausage Company LLC.
He held a number of executive positions at Oscar Mayer/Kraft, ConAgra and Sparks Commodities Inc. Ginn has also served on the faculties of a number of universities, including Texas Tech Univ. and Colorado State Univ. He holds graduate and undergraduate degrees in agricultural economics.
The company announced on July 15 it has entered into non-binding letters of intent to acquire Kansas City Sausage Company LLC and Pine Ridge Farms LLC. Ginn has an ownership interest in these companies. The exclusivity periods for each of these letters of intent has been extended to Dec. 1. The company has stopped negotiations and anticipates finalizing negotiations for these transactions following the conclusion of the special committee's investigation.
AgFeed Industries is an international agribusiness with operations in the US and China. It has two business lines: animal nutrition in premix, concentrates and complete feeds and hog production. AgFeed's hog production unit in the US is M2P2.
The company said the transfer of these processes, procedures and techniques will allow its new Western-style Chinese hog production units to set new standards for production in China, the world's largest pork market. It consumes 50 percent of global production and more than 62 percent of total protein consumed in China is pork. Hog production in China currently enjoys income-tax free status.