The world's top brewer, Anheuser-Busch Inc, has exercised a convertible bond in Tsingtao Brewery Co, doubling its stake in China's largest beer maker, Reuters reported. Tsingtao, one of China's few globally known brands, said in a statement issued on Friday that Anheuser-Busch's stake in the firm will increase to 9.9 % from the current 4.5%.

The convertible bond is part of a strategic agreement between the two brewers made last October, in which Anheuser-Busch will raise its stake in Tsingtao to 27 percent over seven years from the current 4.5%. Under the agreement Tsingtao will issue convertible bonds to Anheuser-Busch in three instalments valued at around US$182 million (HK$1.4 billion). Anheuser has exercised the first tranche of those bonds.

As the debt converts to equity over seven years, Busch's stake will increase from 4.5 to 9.9 %, then to 20 %, and then to 27 % -- all in the form of "H" common shares listed on the Hong Kong Stock Exchange.

27 June, 2003