Fertilizer maker Hanfeng scraps CEO's privatization plan

Wed Jan 8, 2014 11:46am EST
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Jan 8 (Reuters) - Fertilizer company Hanfeng Evergreen Inc has scrapped a plan to take the company private and its chief executive has left his job, developments that drove the Toronto-based company's shares 14 percent lower on Wednesday.

Hanfeng, which makes slow-release fertilizer for the Chinese and Indonesian markets, said in a statement on Wednesday that it has terminated an agreement with CEO Xinduo Yu for him to take the company private. The company also said Yu is no longer its president and CEO, but will stay on as a director.

Hanfeng and Yu announced a deal in February 2013 under which Yu and a corporation he owned would take Hanfeng private. Yu already owned about 20 percent of the stock.

Hanfeng said it has claimed a reverse break fee of C$750,000 ($694,000) from Yu.

Calls to Hanfeng spokespersons were not immediately returned.

The company said it has hired FTI Consulting as interim manager as it looks for potential partners and strategic alternatives. Chief financial officer Niral Merchant will continue in his role and report directly to the board of directors.

Agrium Inc , a much larger Canadian fertilizer company, also owns 20 percent of Hanfeng, according to Thomson Reuters data. Spokespersons for Agrium, which had supported the privatization plan, could not be reached for comment.

Hanfeng shares dropped as much as 30 percent on Wednesday morning on the Toronto Stock Exchange, before paring losses to 14 percent, or 7 Canadian cents, at 43 Canadian cents. ($1=$1.08 Canadian) (Reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Peter Galloway)