Shares in China Rongsheng Heavy jump on HK$3.2b fundraising plan
Shipbuilder's shares go on roller-coaster ride as trading resumes amid plans to raise up to HK$3.23b for foray into energy
Shares of debt-plagued, loss-making China Rongsheng Heavy Industries Group Holdings took a roller-coaster ride yesterday as the shipbuilder moved to overhaul its business, raising billions to support its foray into oil exploration and changing its name to reflect its new interest in energy.
Rongsheng announced on Wednesday it planned to raise up to HK$3.23 billion by issuing unlisted warrants to Kingwin Victory Investment, a vehicle owned by mainland private equity investor Wang Ping.
In their first trading day following a two-month suspension, Rongsheng's shares soared 16.9 per cent to HK$1.59 when the market opened before going into a dive and closing down 5.15 per cent at HK$1.29.
"The warrant issue is a suitable opportunity to raise capital for the company, which would allow the company to seize suitable investment opportunities in the energy resources exploitation sector and develop into a more comprehensive energy service provider," Rongsheng said.
The issue will take Wang's stake in Rongsheng to 16.73 per cent, making him the second-largest shareholder after founder Zhang Zhirong. Wang is president of the China Mergers & Acquisitions Association and vice-president of the China Venture Capital Association.
He already holds Rongsheng convertible bonds that could eventually translate into a further 23.51 per cent interest in the firm.
Wang also owns 78.75 per cent of China Ocean Shipbuilding Industry Group, another embattled shipbuilder listed on the main board that recorded a HK$222 million net loss in the first half of this year.