Jinan Steel to collect CNY 3 billion through private placement
Saturday, 31 Oct 2009
China Securities Journal reported that Jinan Iron & Steel Co Ltd the listed arm of Jinan Steel Group gives out its second financial plan recently that the listed company plans to offer at most 650 million shares non-publicly at the price of not less than CNY 4.48 per share aiming to collect about CNY 3 billion.
The money, to be raised by private placement, will be divided into CNY 2.164 billion for the listed company 4# 120 tonnes converter project, CNY 0.333 billion for the upgrading of the roughing mills in medium plate plant and the rest for the liquidity.
According to the mill, the 4# converter, with a designed capacity of 1.6 million tonnes per year is expected to put into production in Dec, 2009. The estimation shows the financial internal rate of return of the converter project is 13.56% and that of the upgrading project is 15.71% with the payback period of 7 years including the building time.
As per report, Jinan Steel halted a plan of issuing CNY 2.9 billion convertible bond three days ago. So, this private placement plan is considered as the substitute of the halted plan.
Jinan Steel said the asset liability ratio will fall from 77.06% to 69.8%, if the company successfully raises CNY 3 billion. Meanwhile, the asset liability ratio of the parent company will decline from 76.95% to 69.61%. To abate the asset liability ratio and control the financial risk might be one of the reasons why the company chose to raise money though share but bond.
