Regular readers of Zero Hedge are familiar with money-for-oil loans. But, as we reported last November, one liquidity-challenged pork producer implemented an absurd twist on that concept that has helped to expose the financial dysfunction at many small- and medium-sized Chinese companies.
Instead of receiving cash, holders of local-currency bonds issued by Zhengzhou-based pork producer Chuying Agro-Pastoral Group - which had 1.3 billion yuan in cash against a short-term debt load of 8.4 billion yuan - would be paid with the company's ham, thanks to an agreement reached between the company and its creditors. The agreement was struck after the company failed to repay a 500 million yuan bond that was due last Nov 5. The spread of African swine fever caused pork demand in China to plummet, creating a cash-on-hand crisis for pork producers.
Well, if you thought that was absurd, you will love what happened next, because according to an announcement on the Shenzhen Stock Exchange, the aptly misnamed Agro-Pastoral Group has run into a new problem: after running low on cash, it is now running low on pigs.