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Chongqing Steel set to issue shares to fund massive restructuring
April 5, 2012 / 5:27 AM / in 6 years

Chongqing Steel set to issue shares to fund massive restructuring

SHANGHAI, April 5 (Reuters) - China’s Chongqing Iron and Steel Co Ltd plans to issue new shares in private placements to fund a massive restructuring, including an issue to its parent company to buy steel plants from the group.

The larger Chongqing Iron and Steel group has embarked on a restructuring estimated at 20 billion yuan ($3.2 billion) by analysts at OSK Securities, a large part of which will be moving steel facilities to the outskirts of Chongqing city to comply with new pollution regulations.

The loss-making listed company did not give any details on the size of the share issue or the amount of funds it plans to raise but said its restructuring plans will be submitted to its board within 30 days.

Its shares have been suspended from trading since Feb.24 while it plans its restructuring. Some key proposals will need approval from the government, the company has said.

Chongqing Iron and Steel, which booked a net loss of 1.5 billion yuan last year, could continue to make losses for two more years, OSK has said.

In addition to a slowdown in demand for steel, the transfer of steel plants to the listed company from the parent will result in a higher debt and depreciation burden, it said.

Chongqing Iron and Steel’s Shanghai-listed shares closed at 3.27 yuan on Feb. 24 after slumping 23 percent last year. ($1 = 6.2980 Chinese yuan) (Reporting by Fayen Wong and Chen Yixin; Editing by Edwina Gibbs)

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