Maanshan Iron & Steel (323) Co., China's second-largest Hong Kong-listed steelmaker, said shareholders approved the sale as much as 3 billion yuan ($387 million) of one-year bonds.
The company's board has yet to decide on details of the debt issue, the Maanshan, Anhui province-based company said in an exchange filing today.
China started allowing companies to sell short-term bills, or debt with maturity of one year or less, in 2005. The move was part of efforts to curb companies' reliance on bank lending and to develop the bond market. Selling short-term securities can help companies to raise extra funds and cut borrowing costs.
Maanshan Steel plans to raise output capacity by 50 percent to 15 million tons by mid-this year by building a plant to make steel used in cars. China's growth in steel demand is likely to outstrip the increase in supply this year for the first time in six years, analysts have said.
The company sold 5.5 billion yuan of bonds in November that can be converted into shares to finance a new plant.
The company's shares fell 2.8 percent to HK$4.84 yesterday in Hong Kong. Its yuan-denominated stock fell 8.3 percent to 5.5 yuan in Shanghai.
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