Chinese Aluminum Smelter Completes Backdoor Listing in Shenzhen

Debt-ridden aluminum smelter Tianshan Aluminum Co. Ltd. has made its way onto a Chinese mainland bourse through the back door after years of trying.

Shenzhen-listed pumping-equipment manufacturer Shimge Pump Industry Group Co. Ltd. announced Saturday that it would change its name (link in Chinese) to Tianshan Aluminum Group Co. Ltd. after acquiring the smelter (link in Chinese), according to notices filed to the Shenzhen Stock Exchange.

The deal is worth 17 billion yuan ($2.4 billion), of which 1.48 billion yuan will be paid by Shimge via an asset swap, while the rest will be transferred through private placement to all Tianshan shareholders.

The team-up will take the newly formed group’s total assets to nearly 41 billion yuan, with a debt-to-asset ratio of 69.39% as of the end of last year.

Tianshan, which is based in Northwest China’s Xinjiang Uygur autonomous region, has an annual production capacity of 1.2 million tons of electrolytic aluminum, and has an alumina project under construction with a planned production capacity of 2.5 million tons.

The IPO process started in March 2019, one month after Tianshan’s talks with education services provider Xiamen Unigroup Xue Co. Ltd. for a similar 23.6 billion yuan acquisition collapsed due to a series of financial issues exposed during the negotiations.

Li Lin, an aluminum analyst at consulting firm AZ China, attributed Tianshan’s eagerness to list to its mounting debts. It has a total of 22.3 billion yuan of debt set to mature this year.

Two of Tianshan’s founder’s sons, via entities acting in concert, hold a combined majority share of 62.73% in the newly-formed company. One of sons, Zeng Chaoyi, was previously found to have handed bribes to a Communist Party official in Zunyi, Guizhou province, according to the party’s anti-corruption watchdog (link in Chinese).

Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Joshua Dummer (joshuadummer@caixin.com)