CSR allowed to raise $1.4b on stock market
Updated: 2012-01-12 11:08
SHANGHAI - The listed arm of China's biggest train maker, China South Locomotive and Rolling Stock Industry (Group) Corporation (CSR), has been allowed by regulatory authorities to raise 9 billion yuan ($1.41 billion) on the stock market, the company said Wednesday.
The Hong Kong- and Shanghai- listed CSR Corp will sell 1.96 billion shares at 4.46 yuan apiece to select investors, it said. But CSR's parent -- state-owned CSR Group -- has agreed to buy no less than 6 billion yuan's worth of the shares, leaving the rest to institutional investors.
CSR's net profit growth in the third quarter of 2011 plunged to 9.66 percent year-on-year from a high of 85.08 percent in the first half of 2011 as the country put the brakes on development of the railway sector after a deadly bullet train crash on July 23 that killed 40 people and injured 210 others.
The decision to slow the development of high-speed rail lines has led to halts in construction of about 90 percent of ongoing railway projects, or 10,000 km of rail lines across the country, local media reported earlier.
CSR is the maker of the bullet trains involved in last July's deadly collision. After the accident, the company's executives bought a combined 540,000 share in August, a move seen as an attempt to bolster battered stock prices.
Analysts say the fundraising would help CSR greatly ease its financial burdens. The company earlier pledged to maintain profit growth and its dividend policy to boost investors' confidence.
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