Minmetals jettisons bad assets from listed unit
Shanghai. October 26. INTERFAX-CHINA - State-owned China Minmetals Corp. (Minmetals), the country's largest metals trader, plans to restructure its listed arm in a bid to insulate the unit from market uncertainties, a source close to the matter told Interfax Oct. 26.
Shanghai Stock Exchange-listed Minmetals Development Co. Ltd. (Minmetals Development) will sell stakes in three Minmetals units to sister firm Minmetals Mining Holdings Co. Ltd. for a total consideration of RMB 951.40 million ($149.93 million), said a board representative who wished to remain anonymous due to the company's listed status.
The assets include full ownership of Minmetals Mining Co. Ltd. (Minmetals Mining) and Minmetals Engineering Co. Ltd. (Minmetals Engineering), as well as a 45 percent share in Datong Tongmei Minmetals Coal Preparation Co. Ltd. (Tongmei). The remaining 55 percent stake in Tongmei will stay in the hands of leading state-owned coal miner Datong Coal Mine Group Co. Ltd.
Market uncertainties have cast a shadow over the outlook of the three businesses, the representative said, and the sell-off will help keep the listed Minmetals Development on an even keel.
Minmetals Mining and Tongmei were both in the red last year, racking up respective losses of RMB 2.65 million and RMB 11.24 million, while Minmetals Engineering saw profits of RMB 12.75 million.
Moreover, Minmetals Development stands to profit from the sell-off under current market conditions, and the three firms are not part of its core business, accounting for only a small percentage of total revenue. The sales are unlikely to have a huge impact on Minmetals Development's financial results this year, the representative added.
The restructuring coincides with the release of favorable third quarter (Q3) results for the listed unit that show profits of RMB 240.19 million ($37.85 million) for the period, a recovery from losses of RMB 683,097 ($107,649) the same time last year. Meanwhile, revenue rose 46.58 percent year-on-year to RMB 48.85 billion ($7.70 billion).
- GD