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| Machine Tool Giant Sells Stake to US Company |
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China's largest machine tool manufacturer, the Shenyang Machine Tool Group Ltd., Saturday sold 30 percent of its equities to the US Cornerstone Financial Company in a move to sharpen the company's competitive edge. "The share holding reform will preserve and increase the value of state-owned assets," said Liu Yongsheng, head of Shenyang's State-owned Assets Supervision and Administration Commission, owner of the Chinese company. Liu said the deal was made in accordance with requirements of the Shanghai United Assets and Equity Exchange, on which the company made 49 percent of its company available for sale to both domestic and foreign buyers last November. "We are looking for strategic investors to buy the remaining 19 percent," said Liu. It is not disclosed how much will be raised from the sale of almost half of the company which has assets of more than 8.6 billion yuan (US$1.1 billion) and where the revenue from the sale will go. Sources close to the commission had said the company, in principle, requires at least three investors that are independent of each other and do not share common equity controllers. No single investor is permitted to buy more than 30 percent of the company's stake, and the ceiling for foreign share holders is also set at 30 percent, the sources added. None of the investors, either from China or overseas, are allowed to transfer their shares within five years of purchase, according to the sources. "We have won a bid to buy the equities," said Rose-Marie Fox, CEO of the US company, adding that she hoped her company would help give the Chinese company a leading position in the international market. Guan Xiyou, general manager of the Shenyang company, said the company expected a 2007 revenue of 10 billion yuan (US$1.3 billion) and would hopefully rank third in the world by 2010. "We will cooperate with the Shenyang company, provide capital and managerial experiences to realize its strategic goal," said Fox. Ranking seventh among machine tool manufacturers worldwide, the Shenyang Machine Tool Group boasts 8.66 billion yuan (US$1.1 billion) in assets, and two of its companies are listed on the domestic stock market. The sale of stakes in large state-owned enterprises to overseas investors, sparked debate among both industry insiders and the general public in China, who fear too much foreign influence in key firms could threaten the country's economic security. A capital market expert said on condition of anonymity that the prescribed limit of foreign ownership will keep the Shenyang company safe from foreign dominance while allowing the state-owned business transform. (Xinhua News Agency June 10, 2007) |
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