Beijing will not directly intervene to shore up seeds company Syngenta against claims from American farmers and grains traders, nor chip in money for its takeover by Chinese buyer ChemChina, the regulator in charge of China’s state-owned companies said on Thursday.
The comments from Xiao Yaqing, head of the State Assets Supervision and Administration Commission, come as Syngenta hurries to settle a dispute that has already scuppered a $7bn bond issue this week. The bond was designed to help pay for the company’s $43bn takeover by ChemChina, China’s largest outbound acquisition to date.
Standard & Poor’s said in a report published last month that Sasac might have to step in to backstop Syngenta against liabilities stemming from a dispute over seeds marketed in the U.S. in 2013, since both the Swiss firm and ChemChina are already heavily leveraged.
Mr Xiao said he was not aware of S&P’s specific comments, but he was confident ChemChina could handle the matter on its own. “Companies have to resolve these cases on their own,” he told the Financial Times after a press conference on state-owned enterprise reform.
“The government won’t give them money. They have the ability to borrow money, they can use their own methods of financing,” he said, adding: “ChemChina is pretty good. Their results last year were not bad.”
S&P currently rates Syngenta at BBB-, the lowest rung of investment grade, while Moody’s rating is even lower, in junk territory.