Hongqiao raising $490m via rights
Updated: 2016-01-12 10:03
By Bloomberg(China Daily)
|
|||||||||||
China Hongqiao Group Ltd, the world's biggest maker of aluminum, will raise nearly half a billion dollars from a rights offer underwritten by its founder, highlighting the difficulties of producers amid five-year-low commodities prices. The company's shares fell in Hong Kong.
The Shandong province-based company aims to bring in HK$3.84 billion ($490 million) by offering seven shares for every 50 held by shareholders, the company said in a statement to the Hong Kong Stock Exchange on Friday. Chairman and founder Zhang Shiping, who has pledged to underwrite 99 percent of the issue, holds more than 78 percent of Hongqiao through a holding company, according to the statement.
"Strategically, the rights issue will address working capital needs and highlights the challenging environment of aluminum markets at current prices," analyst Daniel Kang at JPMorgan Chase & Co said in a note on Monday. "While the parent's role may provide some confidence to the market, it could reduce the company's free float further."
Many metals producers are cutting capacity and trying to reduce debt as commodities prices continue a slide that started in 2011. Hongqiao said last month it would reduce capacity while other top Chinese producers agreed to halt capacity increases. Elsewhere around the globe, Alcoa Inc, the biggest United States maker of the lightweight metal, said last week it will close its smelter in Indiana state, leaving it with just one operating US smelter.
Proceeds from the rights offer will help Hongqiao "strengthen its financial position" with 20 percent going to repay loans, the statement said. The company's total debt-to-equity ratio rose to 133 percent in the first half of 2015, compared with 112 percent during the first half of 2014, according to data compiled by Bloomberg.
Hongqiao fell as much as 2.6 percent on Monday in Hong Kong trading to HK$4.20 a share. Hongqiao's net income rose 33 percent year-on-year to 2.72 billion yuan ($410 million) in the first half of 2015.
Today's Top News
Protest goes violent as rift on refugees escalates
Investors to diversify assets globally to lower risks
Going mobile
Wealth of options for China's super-rich
Man with knife shot dead outside Paris police station
Trading halted after shares fall 7% in opening minutes
China voices its 'resolute opposition' to DPRK test
Design exhibition to attract Chinese art works
Hot Topics
Lunar probe , China growth forecasts, Emission rules get tougher, China seen through 'colored lens', International board,
Editor's Picks
China joins exclusive carrier club as its navy grows |
Noodles - strands of history |
Star Wars may not be a force |
Foreign firms to watch out for in 2016 |
Smog smells like big profits for tour firms |
Going mobile |