(Yicai Global) Aug. 5 -- Kedi Dairy, whose head office was beset last week by angry farmers who have not been paid in more than a year, said Henan province has set up a CNY2 billion (USD286 million) fund to shore up cash-strapped Kedi Group in a bid to avoid a default on its parent company's stock pledge in the dairy.

In return for the support, the provincial government may take a stake in Kedi Group as has happened in previous cases, Xiangsong Capital Executive Director Shen Meng told Yicai Global.

Despite the announcement, Kedi Dairy's shares [SHE:002770] fell 9 percent today to close at CNY2.80 (4 US cents) each, after losing 4.9 percent on Aug. 3.

Based in Henan, the dairy company has fallen behind in its payments since December 2017 and owes the farmers CNY140 million (USD20 million) in unpaid wages. This is despite a first-half earnings report that showed a cash balance of CNY1.8 billion (USD258 million).

Kedi Group, which owns just over 44 percent of the dairy, pledged 99.96 percent of those shares to anchor itself, according to the firm's 2018 earnings report.