Beijing-based Chinese steelmaker Shougang Iron and Steel Co. (Shougang Co.) has announced that it plans to exchange 100 percent equity in Guizhou Province-based Guizhou Shougang Investment Co. (Guizhou Investment) with 51 percent equity in Shougang Jingtang United Iron and Steel Co. (Jingtang Steel) held by its parent company Shougang Group, with the price difference to be paid by Shougang Co. in cash.
As of March 31 this year, 100 percent of Jingtang Steel was valued at RMB 20.107 billion ($3.24 billion), while Guizhou Investment was valued at RMB 537 million ($86.6 million).
Accordingly, 51 percent equity in Jingtang Steel is valued at RMB 10.255 billion ($1.65 billion), while Shougang Co. will pay the difference of RMB 9.718 billion ($1.57 billion) in cash to Shougang Group.
In 2013, 2014 and the first quarter of 2015, Guizhou Investment achieved respective overall operating revenues of RMB 6.9133 million, RMB 89.64 million and RMB 1.6363 million, with net losses of RMB 90.2881 million, RMB 62.5266 million and RMB 23.2984 million, respectively.
Meanwhile, in the same periods, Jingtang Steel achieved overall operating revenues of RMB 31.341 billion, RMB 27.169 billion and RMB 6.443 billion, with a net loss of RMB 1.757 billion, a net profit of RMB 124 million and a net profit of RMB 12.1859 million, respectively.
It is expected that Jingtang Steel will achieve net profits of RMB 298 million and RMB 798 million in 2015 and 2016, respectively.