A Chinese state-owned explosives maker is acquiring a major player in the country’s coal mining industry, as Government plans to reform its debt-ridden sector.
Anhui Leimingkehua Co is acquiring coal mining affiliate Huaikuang Co ltd in a $3.1 billion deal as part of a wider state run initiative to make state-owned enterprises much more efficient.
The deal will be made in cash and newly issued shared.
“The deal is part of the government’s push to reform the state-owned sector and boost the securitisation of state-owned assets,” Leimingkehua said in a statement to the Shanghai Stock Exchange.
The company aims to raise up to 700 million yuan in a private placement of shares to help fund the Huaikuang Co acquisition.
Beijing is trying to streamline its “bloated” and “debt-ridden” state owned sector and plans to achieve this through re-organisations, mergers reductions in excess capacity and the relocation of services.
In September this year, the Chairman of the State-owned Assets Supervision and Administration Commission (SASAC) said that following five years of aggressive restructuring, the plans for reform were “basically complete.”
In that time, the government has ordered a series of mergers between central government controlled conglomerates and cut them down to 98 from 117 under the control of SASAC.
““The intensity of the central enterprises’ reorganization has been unprecedented,” Xiao Yaqing, chairman of the State-owned Assets Supervision and Administration Commission (SASA).
“In the coming five years, we’ll focus more on boosting competitiveness and increasing quality of management of SOEs, especially in preserving and increasing value of state assets.”