Baosteel renews move to prop up shares
(Shenzhen Daily/Agencies)
Updated: 2005-10-14 09:49

Top steel producer Baoshan Iron & Steel Co. Ltd. (SHA: 600019) renewed a pledge Thursday that its parent would spend another US$250 million putting a floor under its shares, as the listed firm floats a chunk of State-owned stock.

In a statement, Baosteel, whose shares have slid 6 percent since it implemented the float Aug. 18, said its parent would buy into the stock if it dipped below 4.53 yuan (US$0.56) at any time during the six months from Oct. 14, it said.

It added that market regulators had agreed to waive a rule that would require parent Baosteel Group to make a tender offer for the rest of the company it does not own, because it would be raising its stake in the listed firm.

The government's program to convert US$250 billion of nontradable, State-owned shares into freely floated paper pushed the benchmark index to eight-year lows when it was unveiled in April, weighed down by fears of holdings dilution.

The money comprises the second, and final, part of the 4 billion yuan that Baosteel Group promised investors in August to use to support the listed arm's share price. That total amount would eventually allow the parent to pick up some 900 million shares ?a or about 5 percent of the listed unit's outstanding stock.

Before the buyback process began, Baosteel owned 73 percent of the listed arm. Listed Baosteel said in September it had used up half of that amount.

In line with the pledge, Baosteel's parent can buy the shares at any time that the stock dips below 4.53 yuan.