Business Activities News
- Hunan News
Date: 8-Mar-2007 Sources: (Shenzhen Daily)
ARCELOR Mittal, the world's largest steelmaker, will raise its stake in Hunan Valin Steel Tube & Wire Co. after the Shenzhen-listed domestic steelmaker issues new shares.
Arcelor Mittal, which had 29.5 percent of Hunan Valin, will take 49.3 percent of the 520 million new shares on offer, boosting its holding to 33.3 percent. Hunan Valin will use the 2.3 billion yuan (US$297 million) raised for growth, the Changsha, Hunan-based company said yesterday. Hunan Valin's news shares were priced at 4.47 yuan.
China, the fastest growing major economy, is the largest maker and user of steel as companies construct more buildings and autos. Arcelor Mittal has been targeting growth in Asia, including China and India, the world's two most populous countries.
'Recent moves taken by Mittal in China show the steelmaker's vast interest in the country,'Ma Haitian, an analyst at Beijing Antaike Information Development Co., said. 'Hunan Valin is targeting higher-grade products to benefit from better profit margins and rising Chinese demand.''
Sridhar Krishnamoorthy, China manager for Mittal Steel Co., which last year bought Arcelor SA in the industry's largest takeover, said the share placement would raise funds to help Hunan Valin increase its stakes in subsidiaries.
'More control of subsidiaries will help and improve operations, which will certainly benefit our shareholders,'' Krishnamoorthy said.
Hunan Valin will use some funds to buy a 12.3 percent stake in Hunan Valin Xiangtan Steel Co. from its parent, Hunan Valin Iron & Steel Group, Hunan Valin said. Hunan Valin will also buy from its parent 6.2 percent of Hunan Valin Lianyuan Steel Co. and 10.6 percent of Hunan Valin Linglian Steel.
Hunan Valin will also use the proceeds from the sale to boost output of steel plates to 1.8 million tons from 1.4 million, the company said in a statement. It will build facilities to cut pollution from its mills, the statement said.
The share sale is subject to government approval. The remainder of the new stock on offer is to be bought by Hunan Valin's parent company.
Hunan Valin said in January that 2006 profit will rise by between 50 percent and 100 percent as the company shifts to higher-grade production and lowers costs. The company had profit of 547.2 million yuan in 2005.
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