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Scandal-hit Sanlu to be auctioned next month

(Xinhua)
Updated: 2009-02-13 20:09

A Chinese dairy company at the center of a milk contamination scandal will go up for auction early next month.

Sanlu Group's assets will be auctioned on March 4 at the Intermediate People's Court of Shijiazhuang, capital of north China's Hebei Province, according to a joint statement by the Hebei Jiahai Auction Co Ltd, Hebei Dongfang Auction Co Ltd and Hebei General Auction Co Ltd.

Sanlu Group's land use rights, buildings, machines and equipment will be up for bidding.

Assets also include Sanlu Group's investment rights and interests over three other dairy companies, the statement said.

The court declared the company bankrupt Thursday.

Sanlu Group failed to repay outstanding debts, which surpassed its assets. It met the conditions for bankruptcy, according to the court order.

Sanlu Group has 274 creditors, the largest being Sanlu Business and Trade Company, a wholly-owned subsidiary of the group itself. The other creditors include banks, distributors and suppliers.

On Dec 19, the group borrowed 902 million yuan ($132 million) to pay medical fees of children sickened by baby formula tainted with melamine and to compensate victims, which increased its debt to 1.1 billion yuan.

Beijing Sanyuan Foods Co Ltd, a potential buyer of Sanlu's assets, said it was watching developments closely.

"When the auction notice for Sanlu is published, our board of directors will meet to decide whether to bid and discuss related details," Wang Qian, secretary of the board of Sanyuan, told Xinhua.

Sanlu leased its plants to a subsidiary of Beijing Sanyuan Foods Co Ltd in December, days after the bankruptcy petition was accepted by the Shijiazhuang Intermediate People's Court.

Sanlu stopped production on September 12. Its melamine-tainted baby milk powder was found to have caused the deaths of at least six children and sickened more than 300,000 other children.

Last month, it was fined 49.37 million yuan by the Shijiazhuang court, which also imposed a life sentence for Sanlu chairwoman Tian Wenhua.