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Broker opts for rights offering

CHANGJIANG Securities Co plans to raise no more than 4 billion yuan (US$585 million) via a rights offering to replenish its capital and expand business but it scrapped a previous 9-billion-yuan plan.

The firm said it gave up the earlier plan via a private placement to raise 9 billion yuan due to the uncertain and sluggish market environment, the brokerage said in a statement to the Shanghai Stock Exchange yesterday.

The Wuhan-based broker announced the share sale plan in April last year to enhance its competitiveness after it went public via a backdoor listing of Shijiazhuang Refining and Chemical Co in 2007. However, the domestic stock market sank nearly 70 percent last year, and the securities regulator has suspended share sales since September.

The broker switched to a rights offering after abandoning the share sale plan and its shares will be allocated to original shareholders at a market discount on the basis of a 20 trading-day average before the issue of the statement, it said, without giving details.

"The funds can help the firm apply for new businesses, such as margin trading and short selling on stocks, and enhance its competitiveness," it said.

The raised funds will be used to open more outlets, acquire securities-relevant assets, increase underwriting reserves to strengthen investment banking business, launch asset management business and other innovative products, it said.

The plan needs approval from shareholders and the China Securities Regulatory Commission.


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