15 December, 2006

China: Parent to put assets into China Chongqing Brewery

Chongqing Beer (Group) Co. plans to inject its entire brewery assets into its listed subsidiary Chongqing Brewery Co., the chairman of the state-owned parent said, according to Reuters, December 14.

"We plan to list all of the group's brewery assets and will launch the plan six months from now," Hua Zheng Xing told Reuters late on Wednesday on the sidelines of a securities industry conference.

Hua said his company had not decided exactly how to inject the assets, but that a share placement might be involved. He added that the listing might double the annual sales of the group's listed entity.

Many large Chinese state-owned groups have listed subsidiaries which own only a fraction of the group's operations. In recent months, a number of these groups have been injecting assets into the subsidiaries in order to raise their market value and secure better access to funding.

British brewer Scottish & Newcastle Plc in 2004 bought a 19.51 percent stake in Chongqing Brewery Co., a major player in southwest China, for 525 million Yuan (now $67 million). The stake has since been diluted to 17.46 percent and would be diluted further by the asset injection, but Scottish & Newcastle would then boost its investment to return its stake to the 19.51 percent level, Hua said.

"It would remain our second largest shareholder," he added.

($1 = 7.83 Yuan)

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