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Denise Tsang

Lam Soon (HK) - 35 per cent-owned by the Malaysia's Hong Leong Group - may restructure its food business after it recovers from poor performances in 1995 and 1996.

  Managing director James Tsao Chen said options such as raising its stake in food subsidiary Lam Soon Food Industries or merging the two companies were being studied.

 Lam Soon (Hong Kong) introduced new shareholders after losses and increased liabilities in 1995 and 1996.

 It is now 35 per cent held by Hong Leong and 40 per cent by the Lam Soon (Hong Kong) founder, the Whang family. Lam Soon (Hong Kong) in turn holds 60 per cent of Lam Soon Food.

  Mr Tsao yesterday said at the company's production base in Shenzhen: 'We are recovering from the poor health. After the recovery, a restructuring will make sense as Lam Soon Food is the largest asset of the group.'   The production base, basically made up of a state-of-the-art flour mill and oil factory, cost $1 billion, causing the group's debts to surge and triggering the eventual sale of the stake to Hong Leong.

 Group chief financial officer Leung Wai-fung said the group's financial health had improved in the past year.

 The net equity-to-debt ratio had dropped sharply to 45 per cent from a peak of 600 per cent during 1995 and 1996, and the group had $200 million cash on hand.

 Mr Tsao said Lam Soon Food's turnover rose in single digits in the past 11 months compared with same period last year.

 Demand for oil and flour had increased as growing numbers of people had shifted to dining at home rather than in restaurants, he said.

 Lam Soon Food would raise flour capacity by 50 per cent in the next 12 months and had recently doubled output of oil to 400 tonnes per month, he said.



Lam Soon weighs shake-up in food business after emerging from losses