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Baoshan Iron and Steel Co Ltd (Baosteel), China's
No 1 steel maker, announced yesterday that it is going to issue 5 billion
shares to raise cash worth 28 billion yuan (US$3.4 billion) to buy assets
from its parent
Shanghai Baoshan Iron and Steel Group Corp.
The merger will more than double the assets of Shanghai-listed
Baosteel, and make the company the world's eighth biggest steel producer.
The move will also pave the way for a listing of
the entire State-owned parent firm, newly-crowned among the world's top
500 multinationals
.
Through the acquisition, Baosteel will control assets from many of its
parent's affiliates, including the majority of steel-making capacity not
owned by the listed firm previously; and non-core assets - software and
trading businesses, real property and a chemical company.
The parent's iron ore joint operations with Brazil's Companhia Vale do
Rio Doce and Rio Tinto of Australia are also part of the merger package.
Rating agency Standard & Poor's said yesterday that its issuer
rating on Baosteel would not be affected by the company's acquisition deal
with its parent "as the proposed transaction represents a straightforward
transfer of assets within the wider Baosteel group."
Standard & Poor's takes a consolidated approach in assessing the
credit profiles of both companies.
"Although Baosteel is expected to assume some debt
from the entities that it plans to acquire, the company's leverage is not
expected to increase greatly, as the additional debt should be more than
offset
by the
planned issues of new equity," Standard & Poor's said.
At most 50 per cent of the 5 billion shares to be issued by Baosteel
will be sold to the public, and the rest - which will be non-tradable -
will be sold to its parent firm, Baosteel said.
The share issue plan will be put up for approval at a meeting of Baosteel
shareholders, scheduled for September 27, and by Chinese regulators.
(China Daily) | 
Updated: 2004-08-13 12:24
