The CEO of organics firm China Yingxia International is in talks with investors in China to end a dispute over interest payments on company loans.

The company revealed that its CEO and chairwoman Yingxia Jiao was in negotiations over funds loaned to her before the company bought Harbin Yingxia Industrial Group, the firm’s wholly-owned subsidiary in China.

The investors and Jiao disagree over interest payments on these loans, which have affected the normal operations of Harbin Yingxia.

Jiao believes that the slowdown of the general economy in China contributed to the difficulties in cash flows of her businesses, which have further affected the interest payments to the initial Chinese investors.

The dispute, which arose in November, caused Harbin to shut down its operations temporally late last month. As a result, the financial performance of the company in the fourth quarter of 2008 and the first quarter of 2009 has been adversely affected, the company said.

“Efforts have been made to resolve the disputes and restore the daily operations of the company,” said Jiao. “Arrangement is being made with the participation of the Harbin municipal government officials to negotiate with the representatives of the initial Chinese ‘investors.'”

Jiao added: “We hope that an agreement will be reached with the committee of the investors that will allow the company to return to its operations and to carry out the annual audit and 10K preparation, although [a] delay may be expected.”

The company has withdrawn its guidance of sales and net income for 2008 and said it expects to give “a more detailed account of these matters”, as well as the full financial implications, in a separate press release or in its annual report on Form 10-K for the fiscal year ended 31 December 2008.