:. Food Industry News


China Yanjing Says Close to 1 bln Yuan Funding Plan

Source: Reuters
20/08/2008

Beijing, Aug 20 (Reuters) - Yanjing Brewery Co Ltd, one of China's biggest beer makers, said on Wednesday it was close to getting approval to raise at least 1 billlion yuan ($146 million).

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"We have a funding plan that exceeds 1 billion yuan that has not yet been approved," said Chairman Li Fucheng, adding that approval was expected "very soon".

The official Shanghai Securities News reported in May that Yanjing was planning to raise as much as 2 billion yuan by selling up to 110 million new shares at a minimum price of 17.88 yuan.

However, Yanjing shares have since fallen by more than one-third, trading below 13 yuan on Wednesday.

Li Fucheng told reporters the ability to raise funds did not preclude Yanjing joining up at some point with a foreign partner.

"We have never said we would never cooperate with a foreign firm," said Li, whose company is often mentioned as a possible target for a foreign brewer.

China's beer market - the world's largest by volume -- is a fragmented industry of nearly 400 brewers, but pressure on profits margins is leading to more consolidation in the sector.

Anheuser-Busch Cos Inc  agreed to a $52 billion takeover by InBev NV  last month, creating the world's largest brewer.

Anheuser-Busch also owns 27 percent of Yanjing's domestic rival Tsingtao Brewery Co Ltd, China's best-known beer brand.

Li said attracting foreign investment was not a goal in and of itself, but rather should be seen as a strategic step in developing the company.

Profitability and pricing power is a challenge in China's beer industry, which produces only about one-sixth the profits per litre as some U.S. brewers, according to Credit Suisse. ($1=6.85 yuan)



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