Chalco to Buy Back Equity in Four Units

China’s largest primary aluminum producer will buy back equity in four subsidiaries as part of a major restructuring plan.

In addition to having signed a buyback plan with eight state-backed companies, Aluminum Corporation of China Ltd. (Chalco) will also continue to suspend the trading of its Shanghai-traded A-shares, it said in a stock exchange filing late Thursday. The company has also listed its H-shares, which have not been suspended, in Hong Kong and on the New York Stock Exchange.

Under the plan, state-owned Chalco will issue shares to the eight companies, including China Life Insurance Company Ltd., BOC Financial Asset Investment Company Limited, and other asset management firms, in exchange for a cumulative 30.80% of equity in Chalco Shandong Co. Ltd., 36.90% in Chalco Zhongzhou Aluminum Co. Ltd., 25.67% in Baotou Aluminum Co. Ltd., and 81.14% of Chalco Mining Co. Ltd.

After the transactions are completed, the four subsidiaries will be wholly owned by Chalco. The exact number of shares Chalco will issue is still under negotiation, the company said.

Chalco announced in December that it had introduced eight third-party investors, including China Life and China Cinda, to add a total of 12.6 billion yuan ($1.95 billion) in capital to its four subsidiaries, in order to reduce its debt ratio.

While its A-shares are being suspended, Chalco will apply for pre-approval from China’s State-owned Assets Supervision and Administration Commission, it said in its statement. The company expects to resume trading of its shares before Feb. 12.

Chalco is one of many large state-owned companies restructuring their businesses as part of a national push to improve efficiency in the public sector.

In 2017, China Unicom sold 35% of its Shanghai-listed unit to 14 strategic investors, including private internet companies Baidu Inc., Tencent Holdings Ltd., Alibaba Group Holding Ltd. and JD.com Inc.

Contact reporter Teng Jing Xuan (jingxuanteng@caixin.com)