Xi'an Aircraft International Corp said today it had gained
regulatory approval to issue shares to buy assets from its parent,
taking a lead among domestic military industrial firms to conduct
group listings.
The green light came just two weeks after China unveiled new
guidelines to encourage military-related companies to go public as
a whole group and attract investments from listed firms and
foreigners.
Xi'an Aircraft said it had received the approval from the China
Securities Regulatory Commission to conduct a private placement
with as many as 10 investors, according to an exchange filing.
The Shenzhen-listed aircraft maker had proposed to collect up to
6.6 billion yuan (US$890 million) selling shares at no lower than
9.18 yuan apiece. Its parent Xi'an Aircraft Industry (Group) Co
will take at least 55 percent of the offering.
Xi'an Aircraft Industry (Group) has planned to inject assets of
civil aircraft manufacturing, research and development as well as
services into the listed unit in exchange for the shares. Part of
its military aircraft assembly lines and component part assets will
also be included.
However, some under-trial projects involving high risk and
initial investment won't be injected into the public arm at the
current stage, Xi'an Aircraft said in an earlier statement, without
giving details.
"The group listing is positive to the company's growth as most
of the parent's quality assets will be injected,'' Wu Yucun, a
United Securities Co analyst, said in a note. ``We expect military
industrial enterprises will strive to seek consolidation and group
listings through 2009.''
China early this month issued guidelines to prompt military
industrial companies to revamp and pursue public stock offerings to
raise capital for expansion as the central government encourages a
shift from military to civilian production.
As part of the initiatives, government-owned publicly traded
firms are allowed to acquire all or some of the assets held by
military industrial enterprises to help them revamp for public
listings.
Guidelines also allow foreign companies to invest in revamped
military enterprises in which the government is the biggest
shareholder, but the combined state holding is lower than 50
percent. These military companies can seek stock listings at home
or overseas.
(Shanghai Daily November 26, 2007)
