Beijing-based company Sanyuan confirmed on Sunday that Sanyuan Group and one of its subsidiaries would bid in next month's auction for Sanlu, a Chinese dairy company at the center of the milk contamination scandal.

Wan Qian, secretary for the board of directors of Beijing Sanyuan Foods Co. Ltd. confirmed the board had agreed that Hebei Sanyuan -- a full-asset subsidiary of Sanyuan Foods Co.Ltd.-- and Sanyuan Group would jointly bid in the auction for Sanlu, and the bid offered should not go beyond 110 percent of Sanlu's total value.

Beijing Sanyuan Foods Co. Ltd, with more than 5,000 people on its payroll, is a Sino-foreign venture which mainly produces dairy products. It also runs outlets of McDonalds and is involved in real estate development, according to a document posted on the company's website.

The company's decision was made known on late Friday. Related announcements appeared at venues for securities trading across Beijing on Saturday.

Beijing Sanyuan Foods decided to pool funds ranging 800 million yuan (about US$117.65 million) to one billion yuan through non-public selling shares to Sanyuan Group, Beijing Sanyuan's parent company, and Beijing Enterprises (Food) Co. Ltd., a big share holder, at 4 yuan per share, according to the announcements.

The money raised will be channeled to Hebei Sanyuan for its future business activities, including buying assets of Sanlu. Sanlu was declared bankrupt on Thursday by the Intermediate People's Court of Shijiazhuang, capital city of Hebei Province. Hebei Sanyuan is expected to make up for the remaining financial shortage through measures including bank loans.

Beijing Sanyuan Foods Co. Ltd. also announced late Friday it would resume share trading Monday after its shares were suspended from transaction on September 25, 2008. The company's shares closed at 5.59 yuan that day.

Sanlu Group's assets will be auctioned on March 4 at the Intermediate People's Court of Shijiazhuang, according to a joint statement by the Hebei Jiahai Auction Co. Ltd., Hebei Dongfang Auction Co. Ltd. and Hebei General Auction Co. Ltd..

Sanlu Group's land use rights, buildings, machines and equipment will be up for bidding.

Assets also include Sanlu Group's investment rights and interests over three other dairy companies, the joint statement said.