Inner Mongolia Yitai Coal Co. (900948), the biggest coal producer in the Chinese region bordering Mongolia, is seeking as much as $1.1 billion in a reduced Hong Kong stock offering, according to terms obtained by Bloomberg News.
Yitai Coal, which already has dollar-denominated B shares listed in Shanghai, is selling 162.7 million shares for HK$43 ($5.54) to HK$53 each, the terms show. About $390 million of the shares are already allocated to cornerstone investors including Datang International Power Generation Co. (991) and Baosteel Resources Co., the sales document shows.
The amount of stock being offered represents about 10 percent of Yitai Coal’s enlarged capital, according to the terms. An additional 24.4 million shares will be offered in the overallotment option if there is sufficient demand. Yitai Coal initially planned to raise $1.5 billion in Hong Kong and has cut the size of its offering by almost a third.
Hong Kong equity offerings have decreased to their lowest level since 2009 amid falling stock markets as Europe’s debt crisis and China’s slowing economy hurt investor appetite for new stock sales.
Inner Mongolia has the biggest coal reserves among all Chinese provinces, with about 700 billion tons at the end of 2008, according to the regional government’s website.
Yitai Coal’s Shanghai-listed shares fell about 1 percent this year as of yesterday’s closing price, giving it a market value of $8.5 billion.
Yitai Coal is scheduled to start trading in Hong Kong on July 12, the terms show. BOC International Holdings Ltd. (3988), China International Capital Corp., Bank of America Corp. (BAC:US), BNP Paribas SA (BNP) and UBS AG (UBSN) are managing the sale, people with knowledge of the transaction said earlier this month.
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