Dutch court rules against Cofco in $500m Nidera claim

A Dutch court has rejected a bid by Cofco International to freeze assets worth more than $500 million belonging to the former owners of Nidera, a Dutch agricultural trading house it purchased in full in 2017.

The Rotterdam district court ruled instead that the Chinese state-owned food business could be entitled to a little more than a third of that in a lawsuit that has seen Cofco accuse the former owners of Nidera of improper accounting at the firm.

The families deny the claim.

"Cofco... was not able to substantiate its claim and provide the judge and other parties concerned with any calculation," according to a statement released by the court Wednesday, adding that the $500 million was an "unfounded estimate - with no provided calculations".

The decision is a blow to Cofco, which in January sought to freeze assets held by companies controlled by Nidera's former owners, which included art, property and bank accounts over allegations that it was misled when it bought 51% of Nidera in 2014 for $1.3 billion.

The claim is on top of a separate action for $187.5 million relating to accounting irregularities when it bought the remainder of the company in 2017 for $500 million - a case that is currently scheduled to be heard in 2019 at the International Chamber of Commerce.

On Wednesday the court lifted the so-called pre-judgement attachments freezing the assets, ruling Cofco’s total claim could amount to no more than $187.5 million for both transactions – a sum that has already been frozen in an escrow account.

Transformative

Cofco International bought Dutch-based Nidera in two stages in 2014 and 2017 for a total of $1.8 billion, with the then CEO of Cofco’s grain business, Matt Jansen, describing the deals as "transformative" for Cofco.

However, since then, Cofco has sued companies controlled by Nidera’s former owners – members of the Salzer Levi, Drake and Mayer-Wolf families - over allegations of improper accounting at its Brazilian operations.

Cofco claims the owners had overstated the advance payment and futures contract assets in the balance sheet by $166 million, which led to a net loss of $110 million and a $500-million overvaluation of 51% of the company that Cofco bought in 2014.

"Only after completion of the arbitration case [at the ICC] will it be decided whether an amount greater than the amount in escrow can be recovered in whole or in part,” the court ruling concluded.

The ICC arbitration case is expected to run for months or even years.