Chinese energy firm seeks rights issue
Source: Bloomberg News |
May 5, 2011, Thursday
|
Print Edition
Print Edition
CITIC Resources Holdings Ltd, a Chinese oil and coal producer with assets in Kazakhstan and Australia, is seeking to raise HK$2.5 billion (US$322 million) through a rights issue to help fund expansion.
The metal producer-turned-energy supplier said it plans to issue 1.82 billion rights shares at HK$1.38 apiece on the basis of three rights shares for every 10 held. That's a 26 percent discount to the stock's closing price on Tuesday.
Citic Resources is seeking to almost double oil output by 2014 from last year to help supply the world's fastest-growing major economy. The unit of state-owned Citic Group will use the proceeds of the rights issue to enhance its financial flexibility, fund investments and develop Yuedong field that will boost the value of its oil-assets portfolio upon full production, the company said in a statement yesterday.
"The rights offering will definitely dilute the share prices of Citic Resources, adding downward pressure on the stock," Shi Yan, an analyst at UOB-Kay Hian Ltd, said in Shanghai.
"There has also been some uncertainty in the company's production growth, and the rights offer will add to some investor frustration."
Citic Resources expected Yuedong to produce 1.8 million tons a year by 2014, former CEO Sun Xinguo said in August. Output at the field in Bohai Bay off China's northeastern coast was expected to be about 60,000 tons in 2010, according to Sun.
Overall output was 2.1 million tons last year. The firm will lift output in 2011, CEO Zeng Chen said on March 28, without giving details.
The Chinese energy producer, which counts Singapore's Temasek Holdings Pte as a shareholder, bought Karazhanbas oilfield in west Kazakhstan in 2007.
The metal producer-turned-energy supplier said it plans to issue 1.82 billion rights shares at HK$1.38 apiece on the basis of three rights shares for every 10 held. That's a 26 percent discount to the stock's closing price on Tuesday.
Citic Resources is seeking to almost double oil output by 2014 from last year to help supply the world's fastest-growing major economy. The unit of state-owned Citic Group will use the proceeds of the rights issue to enhance its financial flexibility, fund investments and develop Yuedong field that will boost the value of its oil-assets portfolio upon full production, the company said in a statement yesterday.
"The rights offering will definitely dilute the share prices of Citic Resources, adding downward pressure on the stock," Shi Yan, an analyst at UOB-Kay Hian Ltd, said in Shanghai.
"There has also been some uncertainty in the company's production growth, and the rights offer will add to some investor frustration."
Citic Resources expected Yuedong to produce 1.8 million tons a year by 2014, former CEO Sun Xinguo said in August. Output at the field in Bohai Bay off China's northeastern coast was expected to be about 60,000 tons in 2010, according to Sun.
Overall output was 2.1 million tons last year. The firm will lift output in 2011, CEO Zeng Chen said on March 28, without giving details.
The Chinese energy producer, which counts Singapore's Temasek Holdings Pte as a shareholder, bought Karazhanbas oilfield in west Kazakhstan in 2007.
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