Danhua Chemical Technology to launch private placement

Jul. 13, 2009 (China Knowledge) - Danhua Chemical Technology Co Ltd<600844><900921> will issue 46.89 million shares to Henan Coal and Chemical Industry Group Co Ltd (HNCC) to raise funds for a plant that will produce ethylene glycol (EG) from coal.

Danhua Chemical Technology said in a statement filed with the Shanghai Stock Exchange that it hopes to raise about RMB 800 million through the placement. HNCC will pay RMB 17.06 per share in cash.

HNCC will be the second largest shareholder of Danhua Chemical Technology after the issuance.

The proceeds from the issuance will go to Tongliao Gem Chemical Co, a unit of Danhua Chemical Technology, to help fund an RMB 4.3-billion investment in a coal-based EG project with an annual production capacity of 400,000 tons.

According to the statement, the shares to be issued will have a lock-up period of 36 months.

Danhua Chemical Technology issued 84.75 million A-shares to seven investors on Apr. 24. It raised RMB 1.1 billion for its coal-based EG production project through the issuance.