Bellamy’s says Camperdown licence suspension followed complaints

Bellamy’s says China’s suspension of an import licence follows third-party complaints over quality, records.

Mother Bridget Hamilton with tins of Bellamy's organic infant formula.

Struggling infant milk formula maker Bellamy’s has dropped a bombshell over its recent $28.5 million purchase of a cannery in Victoria, revealing that a decision by Chinese authorities last week to suspend the facility’s crucial import licence stems from third-party complaints made over quality issues and record-keeping.

Shares in Bellamy’s will remain suspended, after enter a trading halt on Friday, as investors digest the latest update from the company and its recent acquisition of the Camperdown Powder cannery.

In an update this morning, Bellamy’s said it had held discussions with Australian trade officials from the Commonwealth Department of Agriculture and Water Resources and representatives from the powerful Certification Accreditation Administration of the People’s Republic of China (CNCA) over the licence held by Camperdown Powder.

Bellamy’s said China’s CNCA had not made any findings against Camperdown Powder but the inquiries raised by the powerful Chinese gatekeeper to imports of milk formula had been triggered by unnamed complaints over the cannery’s quality.

“Bellamy’s understands that the inquiries raised by CNCA were as a result of allegations received by CNCA from a third-party complainant relating to historical filing and records and to certain previous quality issues relating to Camperdown’s processing facility,’’ Bellamy’s ASX statement said.

“Bellamy’s can confirm that none of the inquiries raised by the CNCA relate to microbiological or contamination issues or Camperdown’s recent change of ownership.’’

The company said the suspension by the CNCA does not impact the current production or sale of Bellamy’s “Australian label” or “Chinese label” product and relates to only third party manufacture of products at Camperdown.

The facility at Camperdown has been closed as Bellamy’s upgrades the cannery and is set to reopen it in late August.

Bellamy’s continues to work with Chinese authorities to remove the suspension of its licence. It will respond to inquiries raised by China’s CNCA by July 15.

Last week, only three days after Bellamy’s finalised its $28.5 million ­purchase of a controlling stake in Camperdown Powder, the dairy group had the rug pulled out from under it by the Chinese government.

Shares in Bellamy’s were placed in a trading halt on Friday after it was announced that Chinese authorities had suspended its key CNCA milk import licence, a regulatory regime overseen by China’s ­Certification and Accreditation Administration (CNCA).

The suspension blindsided the ASX-listed Bellamy’s, which had bought a 90 per cent stake in Camperdown Powder to get its hands on its lucrative China licence, as well as the canning facility.

Late on Friday Bellamy’s said it was working with Australian trade ­officials and channel partners to understand the reasons behind the suspension, but stressed to its shareholders and the market that it was just a suspension and not a cancellation of the licence.

“Importantly the suspension does not impact the sale of the company’s organic baby and ­toddler formula products, which are currently manufactured by Fonterra and Tatura Milk under their respective CNCA licences.”

Bellamy’s added it did not ­intend to can its products at the Camperdown facility until the ­second half of next year, following Bellamy’s own licencing process through Chinese regulatory officials and various facility improvements at Camperdown.

The suspended licence is the latest in a series of sagas that have dogged Bellamy’s operations for two years.

It has seen its share price rocket skyward and then just as quickly collapse in the wake of profit warnings, boardroom walkouts, the loss of its CEO and a shareholder rebellion.

Bellamy’s and its investors hoped its turnaround had begun last month after the board settled on the Camperdown deal and renegotiated key milk supply contracts. As part of those twin deals Bellamy’s triggered a $60.4m ­capital raising.

At the time of announcing the Camperdown deal, Bellamy’s chief executive Andrew Cohen said the acquisition would strengthen the company’s strategic position.