by JIM ALGIE

Financial trouble for one of the largest export buyers of Ontario ginseng has some growers scanning the Hong Kong stock exchange for hints about when they might get paid.

At least one supplier to Hong Kong-based Hang Fat Ginseng Holdings Co. Ltd. said Monday he’s been told to expect payment within three weeks. Henry Kukielka’s Victory Ginseng Ontario Limited has done business as a supplier to Hang Fat for “a number of years.”

Kukielka is telling other growers who call him that “everything’s going as scheduled” with the Hong Kong-based company’s reorganization after dire financial troubles emerged within the past two months.

A publicly-traded company on Hong Kong’s Hang Seng exchange, Hang Fat is registered in the Cayman Islands but operates from a head office in Hong Kong, information provided on the company website says. The corporate site also provides details of recent adjustments in company operations, including a profit warning statement issued Mar. 9 with news of a demand by bank creditors for repayment of HK$26.12 million (CDN$4.47 million) in loans.

“They’re promising everybody’s going to get paid and cleared up,” Kukielka said in a telephone interview, Monday. He predicted “business as usual in another two or three weeks.”

Kukielka, a former tobacco grower who has grown ginseng for 20 years near Vanessa, Ont., anticipates new ownership arrangements for Hang Fat.

Many farmers with operations in Ontario’s sand plains have switched to ginseng to fill the gap left by the province’s diminishing tobacco crop.

Hang Fat reported HK$1.245 billion (CDN$213 million) in revenue for the first six months of 2015. A six-month interim report published in mid 2015 cited total sales of cultivated ginseng worth about HK$944.5 million (CDN$161.63 million).

“They’re doing a company audit,” Kukielka said of his communication with company officials. “I guess somebody’s probably going to take it over,” he said.

Kukielka dismissed concerns that Hang Fat’s recent financial troubles reflect broader problems within the Chinese economy.

“The economy has something to do with it but there are always people that use ginseng over there,” he said. “I think nothing drastic will take place.”

Ontario Ginseng Growers Association chair Carl Atkinson declined a direct interview by phone but answered questions by email.

“When a large player of any sector struggles as Hang Fat has it has a rippling effect on everyone,” Atkinson said by email. The 68-member, Simcoe-based association is “monitoring the Hang Fat situation very closely,” he said.

“Hang Fat plays a large part in the movement of our product,” Atkinson said. “We are monitoring the situation and have no more to report than what is coming out of the Hong Kong market reports.”

Kukielka figures Hang Fat may be the largest single export buyer of Ontario ginseng, but he couldn’t estimate the company’s purchasing volume.

Asked about the existence of a stop-loss program for producers’ receivables such as that operated by Beef Farmers of Ontario, Atkinson said his organization is regulated under the Ontario Farm Products Marketing Board as a Section 12 organization and provides only promotional and government liaison services.

“We can have nothing to do with individual sale or price setting,” Atkinson said. “We cannot manage sales in any way for the growers,” he added.

Haldimand-Norfolk MPP Toby Barrett is Progressive Conservative agriculture critic in the provincial legislature and a 20-year representative of the province’s main ginseng-growing region which he said is “number one in North America for quality and quantity.” Barrett said in an interview, Monday, he has not been asked to intervene in the Hang Fat situation and had little to add beyond what appeared in a late February report in the Simcoe Reformer newspaper.

Even so, Barrett did say the circumstances may support an argument for some form of financial protection for producers similar to existing beef and grain industry programs in the province.

The Hang Fat corporate website describes the company as “one of the most important shipping and receiving ports for American Ginseng in the world,” handling as much as 90 per cent of Canadian exports. It describes company board chairman Yeung Wing Yan as “the king of American Ginseng.”

Company shares were listed on the Hong Kong exchange in June of 2014, but share prices have collapsed since January. Five recent postings to the corporate site highlight recent events.

They include a Mar. 9 profit warning citing bank demand letters seeking repayment of HK$179 million (CDN$30.65 million) and accrued interest. A public disclosure form dated Mar. 7 details the sale of 44.5 million shares to a company “ultimately owned” by Hang Fat chairman Yeung at a price per share of $HK0.0562 (CDN$0.01).

Another profit warning issued Mar. 9 by the company predicts a net loss on 2015 operations mainly because of a bulk return of ginseng wine product worth HK$188 million (CDN$32.19 million). The warning also cites likely delays in the payment of receivables worth as much as HK$615 million (CDN$105 million) from Hang Fat customers.

Further disclosure on the company website refers to an injunction from the High Court of Hong Kong restraining officials from removing assets from Hong Kong or otherwise disposing, or the diminishing the value, of assets. A statement describes the injunction as a personal matter involving chairman Yeung and without adverse impact on the company. BF