(Yicai Global) Jan. 6 -- Chinese pig breeder New Hope Liuhe intends to issue new shares to its largest shareholder to raise CNY4.5 billion (USD706.5 million) to repay some of its bank loans amid declining pork prices.

The meat processing company will issue up to 367.6 million shares to its largest shareholder South Hope Industrial, pricing the shares at CNY12.24 (USD1.90) apiece, the Sichuan province-based firm said in a statement yesterday. The price is 28 percent less than yesterday's closing price.

New Hope Liuhe's stock price [SHE: 000876] closed up 0.1 percent at CNY17.12 today, resulting in a market value of CNY77.1 billion (USD12.1 billion).

Since last year, the swine farming industry has suffered a great loss because of the pig cycle downturn and due to the African swine fever outbreaks, causing New Hope Liuhe a high debt-to-assets ratio, said the firm. Completing the private placement can help the company reduce its debts and interest payments to boost its profitability, it added.

The past few years have been topsy-turvy for New Hope Liuhe. After the viral animal disease prompted the firm to cut its livestock inventory amid major pork price hikes, last year turned things around for the breeder but not in a good way. In the first three quarters of 2021, the company reported a net loss of CNY6.4 billion (USD1 billion). During the same period of 2020, it had recorded a net profit of CNY5.1 billion, according to its earnings reports.

Chinese pork prices have returned to lower levels. The meat was priced at CNY16 per kilogram late last month, down by more than 50 percent from that of early 2021, according to data from the National Bureau of Statistics.

The fresh issuance should make New Hope Liuhe's biggest shareholder even more powerful. New Hope Group, whose actual controller is the agricultural company's founder Liu Yonghao, directly and indirectly holds a 54.6 percent stake in New Hope Liuhe. The figure is likely to rise to 58 percent after the private placement is finished, according to the announcement. New Hope Group owns South Hope Industrial.

Editor: Emmi Laine, Xiao Yi