Tetra Pak lawsuit hangs over IPO candidate

PUBLISHED : Friday, 26 November, 2010, 12:00am
UPDATED : Friday, 26 November, 2010, 12:00am

Listing candidate Greatview Aseptic Packaging is fighting a 'David versus Goliath' legal battle launched by Switzerland-based giant Tetra Pak.

The Shandong-based provider of aseptic packaging materials to food and drink makers was taken to a German court in July over allegations of infringing on one of Tetra Pak's European patents, according to its listing prospectus.

Tetra Pak has 79.7 per cent of the global market and 70.2 per cent of the mainland market last year by sales volume, according to research firm Frost & Sullivan. Greatview's share on the mainland was 9.6 per cent.

Greatview said: 'While we intend to defend such claims vigorously and have challenged the validity of the patent by initiating formal opposition proceedings against it, a protracted litigation is costly and time-consuming ... Tetra Pak has substantially greater resources than [us] and may file claims against us in the future in Europe and elsewhere, including [the mainland].'

If it loses the battle, Greatview said it would have to use an older production method, which requires a change in the formulation of a raw material. This will result in deployment of service engineers to clients' factories to make the adjustment, with an estimated 15 million yuan (HK$17.5 million) of additional costs.

Tetra Pak did not specify the damages it is seeking, but Greatview's legal adviser, Freshfields Bruckhaus Deringer, said the maximum damages could be 20 million yuan and costs claimed could amount to Euro140,000 (HK$1.45 million).

The maximum exposure on a possible mainland claim could amount to one million yuan, Greatview's mainland legal adviser, An, Tian, Zhang & Partners, estimated.

Greatview is seeking to raise up to HK$1.16 billion by selling 233.6 million new shares.

Shareholders aim to raise HK$497 million by selling 99.8 million existing shares.

It wants to use 40 per cent of the proceeds to raise production capacity, 20 per cent to develop the European market, 30 per cent to retire bank loans and 10 per cent for possible acquisitions.

Net profit rose 25 per cent year on year to 109.3 million yuan in the first half of this year. Profit last year soared 88 per cent to 164.9 million yuan.

The mainland accounted for 94.8 per cent of its revenues last year. China Mengniu Dairy, Inner Mongolia Yili Industrial and Xiamen Huierkang Food are its three biggest customers, accounting for 62.9 per cent of sales in the first half of this year.

With the addition of a plant in Inner Mongolia, Greatview's annual capacity will rise to 9.2 billion packs by the end of the year from 5.1 billion packs a year earlier. It is mulling setting up a plant in Germany to raise capacity to 15.2 billion packs by 2012.

Meanwhile, China Auto System Technologies, the mainland's second-largest maker of car air-conditioning compressors last year by sales, aims to raise up to HK$763 million by selling 250 million new shares to expand factory capacity and retire debt.

Its output last year accounted for 14.6 per cent of the mainland's car air-conditioning compressor industry, where rivalry is intense among more than 100 makers.

While China Auto's sales volume soared threefold between 2007 and 2009, its average selling price tumbled 17.4 per cent.

Net profit surged 132 per cent in the first half of this year to 83.52 million yuan. Last year's profit rose 3.3 times to 102.5 million yuan.