General Nice Development Ltd., one of the largest importers of coking coal in China, agreed to buy 851.6 million shares at 94 Hong Kong cents each and has the option to buy 863.6 million more, Hong Kong-based IRC said today in a statement. The placement price represents a 34 percent discount to yesterday’s closing price.
Minmetals Cheerglory Ltd., a unit of China Minmetals Corp., agreed to buy 247.3 million shares, which will represent 4.5 percent of total shares after the transaction.
IRC, a unit of gold miner Petropavlovsk Plc (POG), is planning to quadruple production capacity by 2014. Chinese steel production will rise about 4 percent this year as economic growth picks up, boosting demand for iron ore, according to the China Metallurgical Industry Planning & Research Institute.
IRC shares plunged as much as 18 percent today after gaining 13 percent yesterday. They traded 17 percent lower at HK$1.18 as of 11:53 a.m. in Hong Kong.
Petropavlovsk will reduce its stake to 40 percent from 63 percent, while General Nice will hold about 31 percent after the transaction, according to the statement. The deal is still subject to approvals and the Chinese investors will have a sales and marketing agreement, it said.
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