China Zhongwang Holdings Ltd. announced plans to spin off its industrial aluminum extrusion business through an asset swap with CRED Holding Co., a Chinese property company that is A-share listed on the Shanghai Stock Exchange. As part of the deal, Zhongwang will sell the total equity interests in Liaoning Zhongwang to CRED Holding Co. for 28.2 billion yuan ($4.3 billion), and in return will receive the majority of shares (75.42%) of CRED Holding, which will become a subsidiary of Zhongwang. China Zhongwang believes that the proposed spin-off will enable the group to gain a Shanghai Stock Exchange listing.
“The spin-off will set a major milestone in our corporate development history, and is an important step to unlocking the intrinsic value of China Zhongwang,” said Lu Changqing, president and executive director of China Zhongwang. “Upon completion, the Hong Kong listed China Zhongwang will further strengthen the leading position of its industrial aluminium extrusion business via the A-share platform, and at the same time, continue to benefit from the fast growing deep processing business and the flat rolling business, which will soon commence commercial production this year. The new A-share platform gives mainland investors access to invest in a world leading player in the aluminium extrusion industry, enabling the market to better understand the intrinsic value of the company. It will also provide the company a new financing platform. Under a clearer corporate structure, the Hong Kong listed entity will have a more distinctive business focus and competitive strengths. These will benefit the Group’s long-term development and create value for its shareholders.”
Liaoning Zhongwang is a wholly-owned subsidiary of Zhongwang Fabrication and is principally engaged in the production and sale of the aluminum extrusion products and is planning the research and development of the aluminum-intensive special vehicles. The proposed transaction values Liaoning Zhongwang at 41.7 billion yuan ($6.41 billion).
China Zhongwang is the subject of a scope clarification and circumvention case initiated in a petition from the Aluminum Extruders Council (AEC), and which is currently being investigated by the Department of Commerce.