China Shipbuilding Industry Nixes Placement Plan

Date:2011-11-11houhaizhen  Text Size:

November 11 – China Shipbuilding Industry (601989.SH) decided to terminate a private placement, switching to an issuance of 8.05 billion in convertible bonds, reports, citing a company filing.

Some 3.63 billion yuan will be used to acquire Wuchang Shipbuilding Industry, Henan Diesel Engine Industry, Shanxi Pingyang Industry Machinery, Zhongnan Equipment, Jiangshan Ship Machinery and Chongqing Hengshan Machinery. It will also buy a 29.41-percent interest in China Ship Design and Research Center.

Some 4.42 billion yuan will be used for 11 fixed asset investments.

The convertible bonds have maturities of six years with face value of 100 yuan each at coupon rate of less than three percent.

The bonds will be first placed to existing A-share holders with the remainder to be sold to institutional investors.

In April, China Shipbuilding announced a private placement of one billion shares at 12.4 to raise as much as 12.5 billion yuan. It then planned to use 5.36 billion yuan to acquire stakes in the aforementioned seven targets with another 4.14 billion yuan spent on 11 infrastructure construction. As part of the original plan, China Shipbuilding also announced it would supplement its operating needs with three billion yuan raised in the scheduled private placement.

After the announcement, its share price plunged from 14 yuan in April to 11 yuan on May 30.

In June, the firm adjusted it private placement plan by lowering its issuance price to 11.96 yuan and reducing its issuance to 962 million shares. China Shipbuilding says the proposed acquisition will effectively eliminate related party transactions.

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