Sanjiu sells $937m in assets to repay debt

State-owned pharmaceutical giant Sanjiu Enterprise Group said yesterday that it sold more than one billion yuan (HK$937.2 million) of assets to repay bank loans but declined to confirm a report that it owed nearly 10 billion yuan, more than double its net assets.

The 21st Century Business Herald reported yesterday that, at the end of last year, the group held bank loans of 9.8 billion yuan, of which its Shenzhen-listed subsidiary, San Jiu Yi Yao, accounted for 2.75 billion yuan.

According to the report, creditor banks earlier this year held several rounds of talks with the group in an effort to force it to repay the debts. Its annual interest payments are 470 million yuan. The debt is more than double the group's net asset worth, which was 3.73 billion yuan at the end of last year.

The biggest creditor is the Agricultural Bank of China, which in July 2001 signed a deal with the group to provide a 3.1 billion yuan credit line. Other creditors include Nanyang Commercial Bank, China Construction Bank, Citic Industrial Bank of China, Bank of China, China Everbright Bank and two foreign lenders.

Sanjiu, also known as the 999 Enterprise Group, was once owned by the People's Liberation Army but is now under State Council control after the military was ordered to surrender its business operations to the government in the late 1990s.

San Jiu Yi Yao spokesman Li Hao said the firm was working with its parent to sell assets to repay its debt, with 1.3 billion yuan already sold. 'Since the Sanjiu [Enterprise] Group is a state firm, the disposal of assets requires approval of the state bureau ... this process requires quite a long time. To ensure this goes smoothly, we have engaged the help of international assessors to evaluate the assets,' he said.

San Jiu Yi Yao had revenue of 2.16 billion yuan last year, up from 1.86 billion yuan in 2001. Net profit was 165 million yuan, against 121 million yuan previously. Mr Li declined to confirm the group's debt figure.