December 02, 2008

Chinese Anhui plan bonds sale

Shanghai listed Anhui Hengyuan Coal Industry & Electricity Power Co announced that it would issue five year convertible bonds worth CNY 400 million (USD 53.21 million) in total next week.

According to the announcement, Anhui will issue the bonds on September 24th 2007 and bond owners will be able to convert their bonds into shares between March 24th 2008 and September 24th 2012, at an initial price of CNY 50.88 (USD 6.77) per share. It added that once the issuance is complete, Hengyuan plans to use the money gained to purchase both Anhui Wolonghu Coal Mining Co Ltd and Anhui Wugou Coal Mining Co in their entirety.

Anhui said that through the two purchases, it will increase its coal reserves by 10.2 million tonnes to reach 88.87 million tonnes and its annual production capacity could be boosted from 1.4 million tonnes of coal to 1.5 million tonnes.

Mr Zhang Yanbin an analyst with Zheshang Securities said that "On the whole, the profit and development of coal companies is closely related to the rise and fall of steel and oil prices. At the same time though, the increasing number of coal companies listing publicly can help to boost the scale and profit of companies industry wide."