Angang Steel cleared for dual rights issue to raise 20b yuan
Angang Steel announced last night it had been given approval for the first dual A and H-share rights issue to raise up to 20 billion yuan to finance a production plant in Liaoning province.
The China Securities Regulatory Commission has told the Hong Kong and Shenzhen-listed steelmaker it can issue 1.1 billion shares at 15.40 yuan each to its shareholders and up to 267 million shares at HK$15.91 each in Hong Kong.
The company, the listed unit of the mainland's third-largest steelmaker, secured approval from its shareholders and the State-owned Assets Supervision and Administration Commission in May.
Initially, the company will offer 195.8 million shares in Hong Kong based on 2.2 rights shares for every 10 shares held by qualifying H-share equity owners.
The subscription price represents a discount of 40.1 per cent to the HK$26.56 average closing price of the H shares over the past 20 trading days before the determination of the rights issue price.
The price also represents a 47.14 per cent discount to the stock's close yesterday of HK$30.10, which was up 4.88 per cent on the day.
The company expects to raise about HK$3.05 billion from the H-share issue. Morgan Stanley and Citic Securities are the underwriters.
The mainland rights issue is also based on 2.2 rights shares for every 10 shares held. It represents a 57.22 per cent discount over its Shenzhen closing price of 36 yuan after an increase of 5.26 per cent yesterday. The domestic issue should raise about 17 billion yuan.
The company's shares have surged in both markets so far this year - 164.04 per cent in Hong Kong and 252.94 per cent in Shenzhen - as the price of steel has risen.
All shareholders, including parent Anshan Iron & Steel Group, will be eligible to subscribe to the rights shares. Those who choose not to will see their stakes substantially diluted.
The proceeds will fund the company's 22.6 billion yuan, five million tonnes a year steel plant being built in Bayuquan port, Liaoning.
Angang Steel reported a 54 per cent jump in first-half profit to 4.8 billion yuan from 3.1 billion yuan a year earlier. Sales increased 32 per cent to 33 billion yuan.
The company did not declare an interim dividend.
Angang produced 9.69 per cent more steel products in the period to 7.41 million tonnes, including more high-value-added steel products for use in making ships, cars and oil pipes.