China Hongqiao to raise US$80 million to cut debt

The world’s biggest aluminium producer China Hongqiao Group Limited will raise HK$6.24 billion (US$800 million) through sale of shares to reduce debt, Reuters reported Tuesday.

The Group having US$16.6 billion (approximately) liability will use 70 per cent of the raised money to pay off debt this year. The balance amount will be used as working capital, it said in a filing.

The decision to sell shares comes after China Hongqiao faced a defamatory issue last year when Emerson Analytics, a market research group, said in their report that the company had exaggerated its profits and understated costs.

China Hongqiao was asked to suspend trading for almost a year, after which it rebounded back with 28.3 per cent rise in share price.

As per filing, China Hongqiao Holdings Ltd, China Hongqiao’s controlling shareholder will sell 650 million shares to third-party investors at HK$9.60 apiece, a 10.45 percent discount to its previous close.

China Hongqiao Holdings will then buy the same amount in new shares issued by the company, although the former’s stake will decrease from about 74 per cent to 68.5 per cent.

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