It is reported that Kaiyuan Holding Limited decided to sell its securities business assets in order to focus on steel manufacturing, its core business, bringing uncertainties to restructuring of Shandong Iron and Steel and Rizhao Iron and Steel.
Kaiyuan Holding issued in a notice to Hong Kong Stock Exchange on January 18th claiming its wholly owned subsidiary, Global Strategy International Ltd has reached acquisition agreement with Shengyuan Group, selling Global Strategy with HKD 17.7 million. After acquisition, Kaiyuan Holding will be no longer engaged in securities and financial business.
As a wholly owned subsidiary of Global Strategy International Ltd, Kaiyuan Securities Co Ltd registered in July 2010 mainly focus on securities brokerage and financial services. When explaining why to sell, Kaiyuan Holding stated that main businesses of company are steel manufacturing, investment, heat supply and property investment.
Management of company believed that resources focus on main businesses can meet the best interest of Kaiyuan Holding Ltd. Actually, the buyer of acquisition Sheng Yuan Holding was controlled by Mr Hu Yishi former executive director of Kaiyuan HLDG as he held 62.39% shares of Sheng Yuan HLDG.
Mr Du Shuanghua controller of Rizhao Iron and Steel got involved in Kaiyuan HLDG since Dec 2008 becoming the largest shareholder of Kaiyuan HLDG after OTC M&A in that month. Mr Xue Jian became a non executive director in Kaiyuan HLDG as a representative of Rizhao Iron and Steel.
The agreement of acquisition this time meant Hu Yishi faded out from Kaiyuan HLDG and Rizhao Iron and Steel further controlled it.
Analyst believed that Mr Hu Yishi faded out from Kaiyuan HLDG may offer convenience for Rizhao Iron and Steel to use the financial platform of Kaiyuan HLDG. When Shandong Iron and Steel Group tried to restructure Rizhao Iron and Steel, it had to solve interest problem of Rizhao Iron and Steel in Kaiyuan HLDG.
Various actions, like Kaiyuan HLDG peeled off its securities business and focus its resources on steel manufacturing, showed the determination of Rizhao Iron and Steel to do steel business better.
Currently, the negotiation of restructuring between Shandong Iron and Steel Group and Rizhao Iron and Steel was still going on.
(Sourced from MySteel.net)
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