Bonding with China’s CFG

Film Group to raise coin through fund

With a public listing for its stock looming, the all-powerful China Film Group is pursuing still more measures to raise capital by issuing a bond-based fund worth 500 million yuan ($68 million).

Move makes CFG the first Chinese firm in the biz to issue corporate paper. The seven-year secured bond was broadly welcomed by bond traders.

For all intents and purposes, China Film Group is the Chinese film industry — it controls the purse strings, the facilities and the talent, and it decides who makes what and when.

CFG topper Han Sanping has set out an ambitious program to expand the company, including a public listing announced earlier in 2007.

CFG controls the Beijing and China Children’s film studios, operates seven circuits with 400 theaters, is the country’s largest film distributor, has the country’s sole film import license and controls national movie channel CCTV-6. And Han has not stopped there.

The fund is expected to pay for a digital production center for movies and new digital cinemas, as well as upgrade old cinemas around the country.

CFG started building the 84-acre digital production center in a northern suburb of Beijing early last year. The facility cost $122 million, of which the Chinese government invested $27 million.

Han believes the Chinese market is primed for annual growth of 30% over the next five to eight years. Given that the theatrical market grossed some $350 million last year, B.O. will reach $1.3 billion by the end of 2011 if growth is as Han predicts.

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