(Yicai Global) Aug. 12 -- Zhongwang Group, one of the world’s biggest aluminum processors, has failed once more to join the Chinese stock market after the backdoor listing vehicle, real estate developer CRED Holding, pulled out of the CNY30.5 billion (USD4.7 billion) plan. CRED’s shares fell.

CRED announced yesterday that its decision to cancel the deal with Liaoning Zhongwang in view of the current market environment did not constitute a breach of contract by either party, and will not have any adverse impact on existing production, operations and finances.

CRED’s shares [SHA:600890] fell 4.9 percent today to CNY2.52 (39 US cents).

Parent company Liaoning Zhongwang was to have sold its entire stake in Zhongwang Group, worth CNY200 million (USD30.8 million), to CRED in exchange for CRED’s Xinjiang unit, the Liaoning province-based firm said previously. The real estate developer was supposed to pay the difference in value between the two units by issuing shares to Zhongwang Group’s shareholders.

The two parties had planned a similar reverse merger in 2015, but it was called off in August 2019 as the market environment and operating conditions of related entities had changed over the long period. The backdoor listing would have enabled Zhongwang Group to join the Shanghai bourse without needing to go through the formalities and expenses of an iniatial public offering.

CRED’s real estate development business has almost stagnated since 2008. The Beijing-based company reported a CNY50.8 million (USD7.8 million) loss last year. Without any new business in the first half, it is likely to aggravate its loss this year. Termination of the reverse merger plan with may lead to the firm’s delisting.

Liaoning Zhongwang Refined Investment, which owns a 96.55 percent stake in Zhongwang Group, is a wholly-owned subsidiary of Hong Kong-listed China Zhongwang Holdings.

Shares of Zhongwang Holdings [HKG: 1333] closed 1.8 percent up at HKD1.68 (32 US cents).

Editor: Futura Costaglione