(Yicai) Aug. 30 -- Shares in Jingwei Textile Machinery surged by the exchange-imposed limit today after the majority shareholder of Zhongrong International Trust, which recently missed payments to investors, said that it is delisting from the Shenzhen Stock Exchange as the Chinese textile machinery maker is facing major uncertainties.

Jingwei's share price [SHE:000666] soared 10 percent to hit CNY8.86 (USD1.22), giving the company a market capitalization of CNY6.2 billion (USD850.5 million). The stock has lost 20 percent of its value since Aug. 10.

The Beijing-based firm suspended trading of its shares on Aug. 28, saying it was preparing for a major event. On Aug. 29, it said that it would be unable to release its first-half financial report on time.

The decision to delist is because the company is facing major uncertainties in its operations, Jingwei said. The move will have a substantial impact on the firm, it added.

Jingwei will take precautions to protect shareholders, it said. As of March 31, the company’s three biggest shareholders were China National Textile Machinery Group with a 31.1 percent stake, China Hi-Tech Holding with 24.4 percent and China Hi-Tech Group with 2.7 percent. All three are state-owned firms.

It is unusual for a company to voluntarily delist from a bourse. The delisting motion is being proposed by Hi-Tech Group and has been approved by the Board but is still awaiting shareholder approval. Once delisting is complete, Jingwei will try to list on the National Equities Exchange and Quotations, known as the New Third Board.

Hi-Tech Group will offer cash options to shareholders other than the firm's persons acting in concert at a price of CNY9.24 per share if they vote to delist, Jingwei said, adding that the registration deadline is Sept. 13.

It could be that Jingwei is being dragged down by its unit Zhongrong’s default scandal. Jingwei took over Zhongrong in 2010 when it bought a 37.4 percent stake, equivalent to 117 million shares, in the company from Zhongzhi Enterprise Group. As of Dec. 31 last year, Zhongzhi still held 33 percent equity in Zhongrong.

Zhongrong has recently defaulted on wealth management payments that were mainly provided by two investment units of Zhongzhi and in which Jingwei holds equity, namely Hang Tang Wealth Investment Management and Xinhu Wealth Management and Investment. Jingwei owns 20 percent stake of Hang Tang and 8.1 percent of Xinhu.

Editors: Liao Shumin, Kim Taylor