HK-based Chi-Med JV in Shanghai reaps $105M in land deal

China-based joint venture Shanghai Hutchison Pharmaceuticals will receive $105 million from the Shanghai government to vacate current factory space in the Putuo District as it prepares to open expanded facilities outside of the city. The company is a 50/50 venture between Hong Kong-based Hutchison China MediTech, and Shanghai Pharmaceuticals gave up 36 years of land-use rights on the 58,000-square-meter old factory site as it builds a new plant in the outlying Fengpu District. That plant is due to be finished in mid-2016 at a cost of around $100 million, funded by cash reserves and bank borrowings. The new plant is "designed to accommodate an approximately three-fold production capacity increase compared to the old factory," according to a release. Christian Hogg, CEO of Chi-Med, said the company would use the cash from the government, to be paid in three tranches over a year, "to pay off debt, retain cash for working capital and look to pay dividends to the shareholders of SHPL." Release

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