Assets list plan to boost Shanxi

By Fu Chenghao  |   2008-12-23  |     NEWSPAPER EDITION

SHANXI Coal Import & Export Group, a major state-owned coal trading company, plans to list assets worth 4.3 billion yuan (US$628 million) through a China National Petroleum Corp's listed unit.

The listing will be realized via asset swap and share placement, China Petroleum Jilin Chemical Engineering & Construction Co, the CNPC unit, said in a statement to the Shanghai Stock Exchange yesterday.

The restructuring plan will help strengthen Shanxi Coal's business with capital and give it more exposure to the upstream coal mining segment, the statement said.

China Petroleum Jilin said it could no longer provide high investment returns for shareholders and could no longer work as a fund-raising platform, because much of its business in the construction of chemical and petroleum projects overlapped with that of its parent.

CNPC Jilin Chemical, a wholly owned subsidiary of CNPC, will transfer all its shares in China Petroleum Jilin, or 39.75 percent, to Shanxi Coal in return for seven coal trading firms, the statement said.

China Petroleum Jilin will also issue up to 450 million shares to Shanxi Coal at 5.94 yuan each in a private placement, to purchase stakes in three coal mining companies and 18 trading firms now held by Shanxi Coal.

After the deals, both of which require government approval, China Petroleum Jilin will be 75.9 percent owned by Shanxi Coal.

However, the stock's asset quality will be way below other listed coal producers, while its value will be above the industry average, Everbright Securities said in a report yesterday on the restructuring proposal, giving China Petroleum Jilin a "sell" rate.

Government approval for the deals is not certain, it said.