China Shanshui Cement Group Ltd. (691), said it will sell a 20 percent stake to China National Building Material Co. (3323), or CNBM, for HK$1.56 billion ($201 million) to fund debt payment
The Jinan, China-based cement maker will sell 563.2 million new shares at HK$2.77 each, according to a statement to the Hong Kong stock exchange yesterday. The stock closed at HK$2.77 yesterday and has slumped 17 percent this year.
Shanshui said it plans to use the proceeds to replenish working capital, reduce its debt level and improve efficiency. Beijing-based CNBM said in a separate filing yesterday that the deal will promote cooperation with Shanshui and the “healthy development” of the regional cement industry.
Standard & Poor’s last month cut its rating on Shanshui to B+ from BB- because of the company’s “less than adequate” liquidity. Shanshui’s net income fell 52 percent from a year earlier in the first half of 2014 to 167.9 million yuan ($27.5 million), it said in a statement in August.
Policy makers in China plan to stabilize emissions from the steel and cement industries as it seeks to cut carbon emissions per unit of gross domestic product, the National Development and Reform Commission said last month.
CNBM will own a 16.7 percent stake in Shanshui after dilution from the issue of new shares, the companies said yesterday.
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