Zhujiang Brewery plans 2.2B yuan private placement

January 5 -- Guangzhou Zhujiang Brewery (002461) plans to issue up to 215 million shares at not less than 10.37 yuan per share in order to raise a maximum of 2.21 billion yuan, reports stcn.com, citing a company filing.

Proceeds raised will be invested in the second phase of a beer production facility with capacity of one million kiloliters in Nansha, Guangzhou province, and on another production facility in Hunan province which will have capacity of 200,000 kiloliters.

According to the filing, the company had to relocate its facilities in Guangzhou by 2015 as the area is no longer suitable for industrial use.

The brewer said it plans to increase the capacity of Meizhou Zhujiang Brewery and Nansha Zhujiang Brewery, and the private placement will help to realize the plan.

In addition, the current facilities are using outdated equipment and this has resulted in a low utilization rate which affects overall profitability and could not meet the needs of high-end products.

The brewer has thus decided to upgrade its production facilities by adding a high-speed packaging line with capacity of 120,000 cans per hour, and an automated storage system.

According to Zhujiang Brewery, Hunan is its top market in South China by sales, and the investment in Hunan will significantly reduce transportation costs once it is operational.

It was reported that China Resources Breweries, Tsingtao Brewery (600600), Anheuser Busch InBev, and Beijing Yanjing Brewery (000729) controlled 58 percent of the beer market and 70 percent of industry profits.

Shares of the company fell 1.5 percent to trade at 9.21 yuan per share at 11:14 today.