China: Slump in Chongqing Brewery stock may force its chairman to resign

Chongqing Brewery Co., which is nearly 30%-owned by Denmark's Carlsberg A/S, said on December, 21 one of its major shareholders is requesting that the company's chairman be removed from his position following recent sharp declines in its stock price, The Wall Street Journal reports.

The Chinese brewer has come under fire since it said on Dec. 8 that a hepatitis vaccine it had spent more than a decade developing was found to be ineffective.

At 0219 GMT, Chongqing Brewery's shares were up 3.5% at CNY32.53, after a 61% plunge in the previous nine sessions. The benchmark Shanghai Composite Index was up 0.6% at 2228.95.

The losses have exerted pressure on the company's major shareholders. For example, the market value of Carlsberg's stake has declined by CNY7.2 billion (US$1.1 billion) since Dec. 8.

"Dacheng Fund Management Co., which owns a 10% stake in Chongqing Brewery, is now proposing to hold a shareholder meeting for its proposal of the removal of the company's chairman, Huang Minggui," the brewer said in a statement.

Huang, 61, became chairman in 2007 and his tenure is scheduled to end in April 2013.

The statement also said shareholders of Chongqing Brewery will meet on Feb. 7 to vote on Dacheng's proposal.

Chongqing Brewery acquired a pharmaceutical company, Chongqing Jiachen Bioengineering Co., in 1998, a year after its initial public offering in Shanghai, as part of a plan to develop the drug for hepatitis B. The business was attractive to investors because domestic surveys showed that nearly 10% of China's 1.3 billion people could suffer from the illness.

Carlsberg obtained a 17.46% stake in Chongqing Brewery through its acquisition in 2008 of part of Scottish & Newcastle PLC, and it raised its stake in the Chinese brewer to 29.71% for $349 million last year.

21 December, 2011