UPDATE 1-China Food says trading in line; to raise 6.5 mln stg

* Says to raise money through 3-yr convertible loan * Says loan to carry 10 pct coupon per annum * Sees starting trial production from new facility in H1 (Adds details)

Nov 3 (Reuters) - China Food (CFC.L) said on Tuesday it was trading to plan, aided by an improving Chinese economy, and that it planned to raise up to 6.5 million pounds through a three-year convertible loan for its new soya sauce production facility.

The provider of consumer products and animal feeds said it expected to start trial production from the new facility in the first half of next year.

The loan will carry a 10 percent coupon per annum and is convertible into China Food's shares at 32 pence apiece, it said.

The company, which has to date secured and will issue 2.6 million pounds ($4.26 million) of convertible loan notes to institutional and existing shareholders, said it was still in talks with local banks to raise additional funds.

The remaining loan notes will be issued as and when the company needs additional working capital, China Food said.

The company also said it was in advanced talks with two financial institutions regarding additional bank facilities of at least 100 million yuan ($14.65 million). ($1=.6101 POUND) ($1=6.826 YUAN) (Reporting by Tresa Sherin Morera in Bangalore; Editing by Aradhana Aravindan)