Miner plans HK$405.65m rights issue to fund real estate deal with director
China Yunnan Tin Minerals, an iron ore miner, has proposed a HK$405.65 million rights issue to finance its acquisition of an executive director’s interests in a commercial and residential complex in Chongqing.
In an announcement issued late on Monday night the company said that on June 24 it had agreed to pay HK$370 million in cash for 40 per cent of China Sky Holdings.
The deal will allow the miner to move into real estate as China Sky’s main business is the development of Jintang New City Plaza, a residential and commercial development project in Chongqing.
The 40 per cent stake will be bought from China Yunnan executive director Liang Shan, who owns 87.2 per cent of China Sky.
To finance the deal, China Yunnan proposed a share consolidation and then a rights issue. It plans to consolidate every five existing shares into one consolidated shares and then raise net proceeds of between HK$404.26 million and HK$405.65 million by offering shareholders nine rights shares for every one consolidated share at a subscription price of 60 HK cents per rights share.
The company said it wanted to continue to focus on iron ore mining while diversifying into real estate to generate new cash flow. It reported a loss HK$178,000 last year, with turnover down 67 per cent year on year to HK$4.4 million.
The deal is a very substantial acquisition that requires shareholders approval.
The company, which suspended trading in its shares on June 25, resumed trading on Tuesday morning.