China Huarong Asset Management will generate around RMB 42 billion ($6.6 billion) through a share sale to a group of state-backed investors and has announced it will divest further assets as it revealed long-awaited details on a rescue package to keep the troubled bad-debt manager in business, reports Bloomberg.
The Beijing-based firm will sell no more than 41.2 billion shares to investors led by Citic Group at RMB 1.02 apiece, a 23% premium to the last closing price before the suspension of trading, according to a Hong Kong Stock Exchange filing late Wednesday. Upon completion, Citic will hold 23.46% of Huarong, while the Ministry of Finance’s stake will fall to 28% from 57%.
The capital injection is still subject to shareholder and regulatory approval. Huarong’s trouble emerged in late March when the company delayed its annual report, roiling markets across Asia amid concern over whether it can cover its $242 billion in liabilities—including about $20 billion of offshore bonds. The financial giant in August finally revealed it had suffered a record loss of $15.9 billion in 2020, and at the same time divulged outlines of the rescue package.