Sanlu Group, a Chinese dairy company at the center of a milk contamination scandal, will go up for auction on Wednesday at a court in this capital of north China's Hebei Province.

The auction company, the Hebei Jiahai Auction Co. Ltd., on Tuesday declined to disclose how many diary producers will attend the bidding.

The share price of Sanlu's potential buyer, the Beijing Sanyuan Foods Co Ltd., rose by the daily limit-up of 10 percent on Tuesday, as the auction drew near.

Sanyuan was among the first batch of domestic dairy makers to express interest in buying Sanlu's remaining assets, a move encouraged by the central government to consolidate the industry.

The Beijing Evening News quoted its source as estimating Sanlu's assets at 726 million yuan (US$106 million).

The auction company said Sanlu's land use rights, buildings, machines and equipment will be up for bidding at Wednesday's auction at the Intermediate People's Court of Shijiazhuang.

The same court declared Sanlu bankrupt on February 12 on charges of its failure to repay outstanding debts, which surpassed its assets.

On December 19, the group borrowed 902 million yuan to pay the medical fees of children sickened by baby formula tainted with melamine and to compensate victims, which increased its debt to 1.1 billion yuan.

Sanlu stopped production on September 12. Its melamine-tainted baby milk powder was found to have caused the deaths of at least six children and sickened more than 300,000 other children.

Sanlu leased its plants to a subsidiary of Beijing Sanyuan Foods Co. Ltd. in December, days after the bankruptcy petition was accepted by the Shijiazhuang Intermediate People's Court.

It was fined 49.37 million yuan by the Shijiazhuang court. The same court also imposed a life sentence for Sanlu chairwoman Tian Wenhua.

(Xinhua News Agency March 3, 2009)