The company now expects a loss of $17 million in the quarter and revenues of roughly $84 million. The loss includes the $9.2 million expense regarding the collection of outstanding accounts receivable in its Chinese animal nutrition business and an additional $5 million of bad debt allowance to increase its bad debt provision. As a result, accounts receivable will drop by about $14.2 million.
Management noted that the pressures facing customers is making it be more aggressive in establishing reserves because of the fears out there regarding credit quality. As a part of the concerns, AgFeed is withdrawing its F-1 filing that would have allowed it to spin off its animal nutrition business now that market conditions do not allow the move.
Unfortunately, no one trusts news coming from China and that is evident in the reaction today. AgFeed shares are down 31% at $1.37 today and volume has already doubled its average daily volume now that 3.5 million shares have traded hands. The 52-week trading day is $1.00 to $3.44.
JON C. OGG
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