Singapore-listed firm may see rating upgrade despite shortseller attack

A Singapore-listed Chinese vegetable producer has been put on review for a potential rating upgrade, despite suffering an attack by a short seller recently, local media reported on Tuesday.

China Minzhong Food Corp benefited from the backing of its major owner Indofood Sukses Makmur, which increased its stake in the company to more than 30 percent, the threshold for triggering a takeover bid, after the attack mounted last month by United States-based shortseller Glaucus Research Group.

Glaucus had advised investors strongly to sell the shares in China Minzhong and giving it a target share price of zero.

The share prices of China Minzhong was about halved within hours of the attack before trading was suspended. The share prices have since recovered, partly thanks to the backing of Indofood Sukses Makmur.

The offer was 1.12 Singapore dollars (0.88 U.S. dollar) a share, values China Minzhong at 734 million Singapore dollars (578 million U.S. dollars). Indofood, controlled by Indonesian tycoon Anthoni Salim, has now increased its stake in the company to more than 50 percent since announcing the bid, the Straits Times said.

China Minzhong was the first Singapore-listed Chinese firm to come under attack by a short seller.

Credit ratings agency Moody's said the successful takeover is positive for China Minzhong's credit profile. It will benefit from the backing of its new Indonesian owners.

Moody's has put China Minzhong's Ba3 rating on review for an upgrade.

In particular, Indofood will be able to provide more direct financial support to fund China Minzhong's industrialized farming strategy. China Minzhong budgeted 2 billion yuan (325 million U.S. dollars) for total capital expenditures in 2013 to 2014, and its earlier plan to raise funding via bond issuance did not materialize.

"A prospective increase in equity from Indofood will strengthen China Minzhong's ability to invest in new industrialized plants," Moody's said.