(Yicai Global) July 11 -- Shen Wenrong, actual controller of China's largest private steelmaker, Jiangsu Shagang Co. [SHE:002075], is planning to buy a stake in Dongbei Special Steel Group Co.
An equity investment firm Shen controls will help reorganize the steel maker based in the port of Dalian in Northeast China's Liaoning province, and its two local subsidiaries, Jiangsu Shagang said yesterday.
The statement added that the firm will become the largest shareholder of the state-owned enterprise, but elaborated no further details of Shen's involvement in the reorganization.
Shen is a leading Chinese entrepreneur, and the owner of Jiangsu Shagang, the biggest private steelmaker and one of the largest private companies in the country. The steel mogul is dubbed the 'emperor of the steel industry' and was once the richest man in China.
Another state-owned steelmaker in the region, Bengang Steel Plate Co. [SHE:000761] also announced yesterday morning, it would inject USD150 million (CNY1.04 billion) of its own funds into Dongbei Special Steel and its two subsidiaries, noting that the infusion will make up 10 percent of the company's total capital after the reorganization. Bengang Steel Plate will export its management experience to the three companies to help them revive business operations, per the announcement. Once recovered, Dongbei Special Steel will generate operational synergies with it, Bengang Steel Plate believes.
Dongbei Special Steel is a well-known state-owned enterprise specializing in manufacturing special-purpose steel products in Northeast China, known as the 'old national industrial base.' It has become mired in financial troubles after failing to repay a series of bonds since last March. Its debt crisis precipitated tragedy when its chairman Yang Hua committed suicide by hanging himself in his home.
Dongbei Special Steel formally kicked off its liquidation and reorganization process early last October.