Companies

Chalco to seek bank loans as equity market declines

(Agencies)
Updated: 2010-07-06 10:54

Aluminum Corp of China Ltd, China's largest maker of the metal, will seek bank loans after an equity market decline forced it to delay share sale plans.

The deadline for a planned sale of yuan-denominated shares in China would be pushed back by a year from August 23, the Beijing-based company said today in a statement to the Shanghai stock exchange. Chalco, as the company is known, had earlier won approval from the China Securities Regulatory Commission to sell as many as 1 billion shares.

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China's benchmark Shanghai Composite Index has declined 27 percent this year, entering a bear market, as the government introduced measures to curb property prices and the European sovereign debt crisis roiled markets globally. Aluminum prices have dropped below the costs of production, putting pressure on smelters, Chalco President Luo Jianchuan said last month.

"The current market conditions are not favorable for the share sale and the company will seek bank loans," Shen Hui, a spokeswoman, said by phone from Beijing today.

Chalco is increasing capital expenditure by 36 percent to 14.6 billion yuan ($2.15 billion), Chairman Xiong Weiping said on March 30. The company returned to a profit last quarter as it restarted plants and metal prices rose.

Total liabilities gained 8 percent to 84.9 billion yuan in the first quarter, with long-term borrowings at 24.8 billion yuan, according to Chalco's earnings report. The company sold 5 billion yuan of one-year bonds on the domestic interbank market on June 17 and 3 billion yuan of three-year bonds in March.