CHINA Worldbest Group (Huayuan), one of the country's largest state-owned companies that controls both Shanghai Pharmaceutical Group, Beijing Pharmaceutical Group and tens of other pharmaceutical companies in China, is about to get a 5-billion-yuan bailout.

The State Assets Supervision and Administration Commission has approved a plan to let China Chengtong Group, the commission's investment and asset management arm, invest 5 billion yuan (US$619 million) to take control of Worldbest, Xinhuanet reported yesterday.

The deal will be the largest ever restructuring of an SOE, and is part of the commission's efforts to shift state capital to pivotal sectors affecting national security and the economy.

The China Development Bank, a policy lender, will fund the deal. Chengtong has a 20-billion-yuan line of credit with the bank until 2008, Xinhuanet said.

Chengtong's investment will help Worldbest deal with its debt crisis. Worldbest and all its subsidiaries are unable to service loans totaling 25 billion yuan, and the parent company alone has 4.1 billion yuan debt, Xinhuanet said.

The 5-billion-yuan investment will be injected into the parent company to cut its liabilities and boost liquidity, the report said.

The Shanghai-based textile and pharmaceutical giant has 34 affiliates in China and overseas, including four listed companies.

Chengtong, which used to be a logistics company, is now focusing on asset management. The commission expects Chengtong to become an investment and asset management company like Singapore's Temasek, according to Xinhuanet.

Chengtong, with assets of 19 billion yuan, saw its profits rise last year to more than 209 million yuan from 48.6 million yuan in 2003.