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Baosteel Reaps $20 Million Profit From Guangzhou Shipyard Sale

Feb. 26 (Bloomberg) -- Baosteel Group Corp., the parent of China’s biggest publicly-traded steelmaker, sold shares in Guangzhou Shipyard International Co. for a HK$155.7 million ($20.1 million) profit in less than three weeks.

State-owned Baosteel sold 16.2 million shares in the shipbuilder for HK$16.90 each, according to a term sheet obtained by Bloomberg News. The price was 8 percent lower than Guangzhou Shipyard’s close of HK$18.36 yesterday.

Baosteel bought 31.1 million Guangzhou Shipyard shares at HK$7.29 each in a private placement completed on Feb. 11, according to a Shanghai exchange filing that day. The two other investors were the shipbuilder’s parent, China State Shipbuilding Corp., and China Shipping Group Co., the statement showed.

Guangzhou Shipyard plans to use the proceeds of the private placement to buy a yard in southern China jointly owned by the three investors, according to a Sept. 30 filing announcing the deal.

Shares of Guangzhou Shipyard were down 4.5 percent to HK$17.54 as of 11:18 a.m. in Hong Kong. They have nearly tripled in the past 12 months.

Credit Suisse Group AG managed the share sale for Baosteel, the terms show.

To contact the reporter on this story: Fox Hu in Hong Kong at fhu7@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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