Chinese dairy, declared bankrupt after tainted milk scandal, faces $160 million in debt
BEIJING - The dairy at the center of China"s tainted milk scandal has about $160 million in debt, state media reported Thursday, a day after the company confirmed it was bankrupt.
Xinhua News Agency said Sanlu Group Co. faces 1.1 billion yuan ($160 million) of net debt and that a branch of the Shijiazhuang City Commercial Bank was the creditor that applied to a court to have Sanlu declared bankrupt.
The Intermediate People"s Court of Shijiazhuang, a city in Hebei province where Sanlu is based, accepted the filing, Xinhua said.
The report quoted Wang Jianguo, city spokesman, as saying that as of Oct. 31, the company"s total assets were valued at 1.56 billion yuan ($227 million) while its total debts were 1.76 billion yuan ($256 million), the report said.
Xinhua said Sanlu also owes a creditor 902 million yuan ($132 million) in funds it borrowed earlier this month to pay for the medical treatment of children sickened after drinking the company"s infant formula, and for compensation of the babies" families.
Calls to the spokesman"s office of Shijiazhuang city government rang unanswered while a bank clerk who answered the phone at the Shijiazhuang City Commercial Bank said the bank"s director was unavailable for comment. Sanlu"s officials could not be reached.
Sanlu, like a number of major Chinese dairies, had been exempt from government inspections because it was deemed to have superior quality controls 隆陋 until high levels of the industrial chemical melamine were found in its baby formula and other products in September.
Several more dairies were also found to have doctored their goods in a scandal that was blamed for killing six babies and sickening 294,000 children.
The dairy scandal highlighted the widespread practice of adding melamine, often used in manufacturing plastics, to watered-down milk to fool protein tests. Investigations also discovered it was being added to animal feed after finding melamine-spiked eggs.