Chongqing Iron & Steel targets $1bn capital boost with private placement

Chongqing Iron & Steel Company Limited (CISC) announced a plan to issue A-share stocks to specific subscribers for 2025, aiming to raise up to yuan 1,000,000,000. These proceeds will primarily be used to supplement working capital and repay bank loans, optimizing the capital structure and improving the company's anti-risk capabilities. The issuance aligns with state policies promoting direct financing and supporting the stable development of key industries.

The sole subscriber for this issuance will be Baowu Investment Co., Ltd., a related party controlled by China Baowu Steel Group Co., Ltd. Baowu Investment will subscribe to 757,575,757 shares at a price of yuan 1.32 per share. Following the issuance, Baowu Investment and its concerted parties will collectively hold 35.07% of CISC’s total shares, increasing their stake from 29.51%, triggering a waiver from a general offer obligation. The shares acquired by Baowu Investment will be subject to a 36-month lock-up period.

This transaction requires approval from CISC’s shareholders and class shareholders, a waiver from full tender offer obligations for both A-shares and H-shares, and various regulatory approvals. While the issuance is expected to strengthen CISC’s financial position, a potential dilution of earnings per share is acknowledged, though it will not occur in the short term given the company's current loss-making status.