Baosteel to pool hefty capital by increased share issue

China's largest steel maker, Baoshan Iron and Steel Co. (Baosteel), announced that as of Friday it would implement its plan of raising approximately 25 billion yuan (about 3 billion US dollars) by issuing an additional five billion A-shares.

In a prospectus posted by the company, Baosteel said it would use the proceeds to buy assets from its state-run parent Shanghai Baosteel Group Corp. and affiliates worth 27.5 billion yuan (some 3.31 billion US dollars).

The assets include a Baosteel chemical plant worth 2.5 billion yuan, a 74 percent interest in Meigang worth 5.48 billion yuan, steel assets from the No. 1 Steel worth 9.29 billion yuan and Baosteel International worth 3.71 billion yuan.

The purchase will raise its steel capacity by 56 percent, making it the world's eighth biggest producer. It was previously the 17th biggest. The acquisitions will also increase its 2005 net profits by some 37 percent to 12.9 billion yuan.

Two billion of the additional shares will be issued to public investors, while the remaining three billion shares will be offered to its parent company.

Baosteel's application for increasing its share issues was approved by the China Securities Regulatory Commission in January. The shares issue will end by April 27.