Fosun halts trading pending ‘inside information’ release

FOSUN International agreed to sell its stake in the parent company of Nanjing Iron & Steel for 15 billion yuan (S$3 billion), as one of China’s largest non-state conglomerates disposes assets for debt repayment, according to people familiar with the matter.

Jiangsu Shagang Group is set to buy the stake from Fosun, said the people, asking not to be identified discussing a private matter.

Fosun International held about 60 per cent stake of Nanjing Iron & Steel United, the parent company of the listed Nanjing Iron & Steel.

The three parties signed an initial agreement last week, the people said, adding deliberations are ongoing and the companies could decide not to proceed with a deal. 

Fosun International, the major listed vehicle of Chinese billionaire Guo Guangchang, suspended trading in its shares in Hong Kong on Monday, referring to “the release of possible inside information.”

Meanwhile, Nanjing Iron & Steel also halted trading in Shanghai on Monday. 

Representatives of Fosun and Nanjing Steel declined to comment and Shagang Group’s media representative said they have no knowledge of the matter.

Investors have been closely watching how Fosun plans to meet its liquidity needs, including whether it’s making progress in its asset disposal and other refinancing options, after Moody’s Investors Services wrote about the company’s funding pressure in June.

Fosun’s dollar bonds have been volatile since then, slumping from near par to stressed levels, while its shares have plunged about 35 per cent.

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Debt investors turned more bullish toward Fosun International’s dollar bonds on Monday morning, sparking a rally in the securities.

Its US currency notes due July 2023 jumped 6 cents on the dollar as of 11.18 am in Hong Kong, heading for the largest daily gain since July and bouncing back from the lowest-ever closing levels on Friday.

Moody’s downgraded the conglomerate’s flagship operation further into junk territory in August for reasons including “elevated refinancing pressure”.

As of mid-September, the Fosun group faced some US$8 billion of bonds that either mature or can be redeemed early by investors by the end of next year.

Jiangsu Shagang rallied 10 per cent as of the mid-day lunch break in China. BLOOMBERG