NWI sheds Datang stake amid growing buying interest

New World Infrastructure (NWI) has sold its 9.54 per cent stake in H share Beijing Datang Power Generation, taking advantage of investors' growing buying interest in Chinese stocks.

The sale has helped the infrastructure unit of New World Development realise about HK$1.25 billion, which will be used to reduce its debts, running at about HK$8 billion.

NWI said the company, through BNP Paribas Peregrine, sold investors 492.6 million Beijing Datang shares at HK$2.55 each.

The sale price is 8.92 per cent lower than Beijing Datang's closing price of HK$2.80 yesterday but the same as its Monday closing price.

NWI will record a loss of HK$290 million in its profit and loss account due to the provision previously made on the transaction.

NWI paid HK$2.52 a share in 1997 to buy the Beijing Datang stake for HK$1.24 billion.

Beijing Datang is one of the largest independent power producers in China and operates coal-fired electric power plants supplying electricity to the capital and industrial cities in northern China.

Analysts said NWI would benefit from the recent rally in Chinese stocks. Shares in H-share companies rocketed yesterday after Beijing's move to merge domestic and foreign stock markets.

The Hang Seng Chinese Enterprises Index, also known as the H-share index, rose 3.98 per cent yesterday, having climbed 5.05 per cent the day before.

NWI had planned to offload its Beijing Datang stake in November to Germany's E.ON Energie at HK$2.25 per share, but the deal was called off.

ING Baring Securities analyst Bill Mok Kwan-pui said the sale would improve the company's cash flow and reduce NWI's gearing by 5 per cent if all of the proceeds were used to reduce debts.

NWI said the company had stopped new investments in traditional infrastructure and e-infrastructure projects.

The capital raised from the sale, together with HK$2.3 billion cash on hand, would be used to reduce its gearing.

The company also has an undrawn credit facility of HK$1.71 billion.

Mr Chiu said it was required to redeem US$120 million in convertible bonds this year.

Meanwhile, Beijing Datang said yesterday it would contribute 80.7 million yuan (about HK$75.63 million) to Yunnan Kaiyuan Power Generation as part of its 538 million yuan registered capital.