Cofco, China’s powerful state-controlled grains company, is set to appoint the former chief executive and deputy chair of agricultural trader Louis Dreyfus Company as a non-executive director for its international agricultural trading arm.
Serge Schoen, who resigned from the LDC board last year, is poised to become one of Cofco International’s four non-executive directors on the company’s 10-person board. His appointment comes as questions have been raised about Cofco’s strategy for its agricultural trading arm after Matt Jansen, the US executive hired to run the operation, left at the start of this year.
Cofco embarked on an international acquisition spree a few years ago in view to creating a business that would challenge leading agricultural trading houses such as Cargill and Archer Daniels Midland. After spending more than $4bn on acquiring Nidera, a Dutch grains trader, and the agricultural arm of Noble Group, Cofco’s plan faced setbacks with the discovery of a large biofuels trading loss caused by a rogue trader and accounting issues in Brazil.
Cofco wanted to focus on integrating the acquired businesses, and Mr Jansen departed due to the lack of support for plans for further growth through purchases.
The extent of the problems at Nidera were highlighted by the company’s latest filings to Dutch chamber of commerce.
The Dutch group posted net losses of $266.7m in 2016 and reinstated its results for the previous year, reporting after-tax losses of $65.9m for the 15 months to the end of December. The company was forced to turn to Cofco for a series loans in the face of the losses, borrowing almost $260m from Cofco over the past 6 months. Cofco provided a $218m loan in December last year followed by another $40m in March 2017. Prior to these borrowing, Nidera signed a $40m loan agreement from Cofco and Nidera’s founding families at the end of 2015.
As part of its losses from “iregularities” discovered in its biofuel trading busines in Rotterdam, Nidera’s 2015 numbers were affected by $115m in losses, while a “significant overstatement related to the prepaid expenses and the [mark-to-market] measurement of forward contracts” also hit the group’s results.
Cofco International, completed the full acquisition of Nidera in February 2016, with Tim Lodge, the Dutch group’s chief financial officer, becoming the CFO, working alongside chief executive Jingtao “Johnny” Chi.
Cofco did not respond to requests for comment.