Shares in China Food Company jumped 5% after the animal feed and condiments company said that, given increasing optimism over its future, it was dusting off plans for a soy sauce factory.

The London-listed group, which is based in China's Shandong providence, said it would through a convertible bond issue to raise up to £6.5m to bankroll the development of the plant.

About £2.6m had already been secured, including £1m converted from shareholder loans from China Food's biggest investor and founder, Fu Guoping who, with his wife Feng Bo, stands to own 22.8% of the company once options are taken into account.

John McLean, the China Food chairman, said the funds placed the group "in a very strong position to continue to grow", adding that the sauce factory would start trial production in the first half of 2010.

'Increasingly optimistic' 

The company said that it had noted a "further improvement in trading conditions", reflecting a Chinese economy which grew by 8.9% in the July-to-September period.

"We are increasingly optimistic about the future," Mr McLean said.

China Food, which also announced a bank facility of at least RMB100m, said its convertible bonds, repayable after three years, would offer an interest rate of 10% and convert into shares at 32p apiece.

China Food shares closed up 1.5p at 32p.