Loan to aid food company expand
Red chip Ng Fung Hong is planning a loan facility of about US$120 million to help finance an expansion it intends next year.
A company source said the programme would cover growth of its supermarket network and an increase in production of food processing operations.
He said the company would appoint the banking syndicate that will handle the loan this week.
Ng Fung Hong, indirectly owned by the mainland's Ministry of Foreign Trade and Economic Co-operation, has about HK$500 million cash on hand after its purchase this year of a 51 per cent stake in a marine fishing project in West Africa.
The source said the cash would be enough for the company's acquisition plans this year, which included the purchase of Minquan Winery in Henan and of a food processing plant and abattoir in Guangdong.
'Ng Fung Hong has asked the China Securities Regulatory Commission whether the acquisitions will require its approval,' he said.
The stock market had initially expected Ng Fung Hong to tap equity funding for its acquisition and expansion to capitalise on the buying frenzy for red chips.
'The company has opted for debt financing because it currently has no debts at all. It is not very healthy in terms of balance sheet management,' the source said.