Shares in infant formula maker Bellamy's have rocketed to their highest level this year after the company confirmed that its recently acquired Melbourne factory had got its China export licence back.
In a statement to the ASX on Wednesday morning, the Tasmanian-based company said the licence suspension had been lifted, adding it had "diligently responded to all requests and queries on behalf of the CNCA (Certification Accreditation Administration of the People's Republic of China) and worked, with the assistance of Australian officials, through the process as stipulated by the Chinese authorities".
At the time of the announcement, Bellamy's stock was trading at about $8.04, but promptly soared after to hit a high of $8.75 just before midday on Wednesday.
Bellamy's CEO Andrew Cohen said in the statement to the ASX the company was "pleased that Camperdown's suspended registration has today been lifted. Bellamy's appreciates the important role the CNCA has in protecting Chinese consumers and the support of the Australia trade officials in assisting us throughout this process."
The suspension of the licence of the Camperdown Powder canning facility, in the bayside Melbourne suburb of Braeside, in early July came as a major shock to the company and its investors. Just a few weeks earlier, Bellamy's acquisition of the canning facility had been unveiled as a key initiative underpinning its turnaround plan and announced along with plans for a $60.4 million capital raising.
At the time, the company said the acquisition of a 90 per cent interest in the Camperdown business, for total consideration of $28.5 million, "provides an opportunity to reduce key regulatory risks". It also said its board believed the acquisition "strengthens Bellamy's competitive position, by addressing trade and consumer concerns regarding CFDA registration and a contract manufacturing model".
The shock suspension of Camperdown's China export licence put Bellamy's into a trading halt that lasted for almost two weeks. It also forced Bellamy's to offer retail shareholders the opportunity to hand back new shares they had acquired in the company via the capital raising, and get their money refunded.
When Bellamy's emerged from its two-week trading halt on July 20, the stock traded like a yo-yo, falling to $5.88 before recovering to close that day at $6.40. This meant people who took up extra shares in the capital raising, priced at $4.75 a share, would have made a quick windfall profit.
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