A SHENZHEN-LISTED livestock firm squeezed for cash has proposed to bondholders a plan to pay them some of the interest owed with ham and gift boxes of meat, according to an exchange filing, sending its stock soaring Friday.

Zhengzhou-based pork producer Chuying Agro-Pastoral Group Co. said last week that it has reached an initial agreement with creditors holding 271 million yuan (US$39 million) in its debt over such a plan, according to a filing on the Shenzhen Stock Exchange. Only the interest portion will be repaid with ham or pork gift packages, it said.

The announcement came after the company failed to repay 500 million yuan in local bonds due last Monday amid a cash crunch resulting from a drop in demand for pork products thanks to the spread of highly contagious African swine fever. As of Sept. 30, the company had 1.3 billion yuan in cash, compared with short-term debt of 8.4 billion yuan.

“The currency funds are deferred and the interest is mainly paid by the firm’s ham, ecological meat gift [boxes] and other products,” said Chuying Agro-Pastoral. “The scope includes all existing debts of the firm.”

The firm has proposed that the principal would be mostly repaid with money, but payments would be postponed.

On Friday, shares in Chuying Agro-Pastoral rose nearly 10 percent following its novel offer to repay.

For Judy Kwok-Cheung, director of fixed income research at Bank of Singapore, these cases illustrate the liquidity concerns facing small and medium enterprises in China. “Payment in kind is generally not seen as acceptable for debt repayment,” she said.

Still, at least it’s luxurious ham. A gift package from Chuying Agro-Pastoral costs 8,999 yuan (US$1,298) on the e-commerce website of JD.com.

Yicai Global reported that the strategy is “only a preliminary plan and the ham is yet to be delivered, as a concrete deal is still under discussion.” (SD-Agencies)