Exchange blocks Dalian Port bid for Jinzhou Port stake
Open-market share purchase fails on lack of rules governing B-share deals
Dalian Port, the operator of China's eighth-largest port, has failed in its attempt to buy a sizable stake on the open market in mainland-listed Jinzhou Port due to the lack of regulations governing the purchase of US dollar-denominated B shares.
The Shanghai Stock Exchange rejected Hong Kong-listed Dalian Port's request to buy A and B shares of the northeastern China port operator, said Wang Peng, the company's head of investor relations.
The company wanted to buy the stake to increase its share of mainland trade in oil and containers, Mr Wang said.
Since China began implementing its share reform plan under which state-owned non-tradable shares are converted into ordinary equity, the country's securities regulator has allowed companies to make offers to shareholders in the open market.
Several firms have successfully bought stakes in the market for A shares, which are denominated in yuan, but no similar attempt has been made in the B-share market.
The B-share market originally was set up as a channel for mainland companies to raise foreign currency without selling stakes overseas. But, for a variety of reasons, it never proved to be a hit.
Shares of Jinzhou Port resumed trading yesterday after Dalian Port issued a statement saying it had abandoned its share-purchase plan.
The company's B shares fell 1.64 per cent to 35.9 US cents while its A shares slid 0.74 per cent to 4.03 yuan. Trading was suspended on August 29.
Dalian Port's management never discussed its share-purchase plans with Jinzhou Port officials, according to a source in Jinzhou's investor relations department.
Jinzhou's listed A and B shares account for 48 per cent of the company's total equity.
The remaining A shares are owned by Oriental Group and six other investors who cannot sell the equities within 12 to 36 months under the terms of the company's share-reform plan.
The acquisition would have increased Dalian Port's market share in the Bohai Sea, Mr Wang said.
He also said the company planned to inject assets into Jinzhou Port as a way of gaining a back-door listing on the domestic market, although the timing had not been fixed.
Dalian Port raised HK$2.16 billion in a Hong Kong initial public offering in April for building berths and 12 crude oil storage tanks.
The company posted net profit of 375 million yuan for the first half, including 108.7 million yuan of interest income from the proceeds of its share sale, down from 242 million yuan a year earlier.
Jinzhou Port reported a 17 per cent fall in net profit to 67 million yuan in the first six months as sales fell 10 per cent to 228 million yuan.
No deal
Purchase aimed at boosting Dalian Port's cargo volumes
Port's management did not discuss plans with Jinzhou Port
Jinzhou Port resumes trading after purchase plan is dropped
