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Sanlu leases plants to Beijing-based dairy company

(Xinhua)
Updated: 2008-12-30 20:54

SHIJIAZHUANG - Sanlu Group, which was at the center of China's melamine-tainted milk scandal, has leased its plants to a subsidiary of Beijing Sanyuan Foods Co. Ltd., officials said on Tuesday.

The two sides signed the lease on Monday, and the Hebei Sanyuan company will soon start production at the plants, which shut down on September 12, according to the information office of the Shijiazhuang government, Hebei Province.

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The plants include four producing dairy products, one packing plant and milk cow farms.

The information office did not give further details on the lease.

Shanghai-listed Sanyuan had been negotiating with Sanlu over a possible restructuring since the scandal surfaced.

A court has accepted a bankruptcy petition for Sanlu Group, which faces 1.1 billion yuan (US$160 million) in net debt.

Sanlu products were found to contain melamine, which was being used to increase the apparent protein content in milk. The use of the industrial chemical is restricted in food.