Jiangnan Red Arrow raised 1.27 billion yuan to issue new shares
**Abstract:**
Jiangnan Red Arrow announced on December 11 that it had issued non-public shares at a price of 9.68 yuan per share, which was not less than the average trading price of the company’s stock over the 20 trading days prior to the announcement of the board's first resolution regarding the restructuring. The company raised a total of 1.323 billion yuan, with a net amount of 1.27 billion yuan after deducting related costs. A total of 137 million new shares were added, with 137 million yuan allocated to "increased registered capital" and 1.133 billion yuan recorded in the "capital reserve – equity premium" account.
The 137 million A-shares issued on December 11, 2013, were allocated to nine specific investors, including ICBC Credit Suisse Asset Management Co., Ltd. After the issuance, Jiangnan Red Arrow had a total of 738 million shares outstanding. These newly issued shares were subject to sale restrictions and began trading on December 12, 2013.
Among the nine investors, Beijing Infrastructure Investment Co., Ltd. received 13.84 million shares worth 134 million yuan; Shenyin Wanguo was allocated 13.74 million shares for 133 million yuan; CCB received 18.59 million shares for 180 million yuan; ICBC Credit Suisse obtained 24.2 million shares valued at 234 million yuan. Anhui Tiejian Investment Fund and Anhui Investment each received 13.7442 million shares, totaling 133 million yuan. Tsinghua University Education Foundation acquired 15.5 million shares for 150 million yuan, while Qingdao Jiahao was awarded 14 million shares worth 136 million yuan. Anhui State-owned Financial Investment received 9,357,500 shares, valued at 90.581 million yuan.
After the share issuance, the top ten shareholders of Jiangnan Red Arrow included Yuxi Group (36.04%), Ordnance Industry Group (7.63%), Jiangnan Group (5.59%), Wang Siqing (4.33%), Shanghai Xunbang (2.86%), Jiantou Company (2.52%), Beijing Jinwanzhong (2.43%), Tsinghua University Education Foundation (2.10%), Qingdao Jiahao (1.90%), and Beijing Infrastructure Investment Co., Ltd. (1.88%). Together, they held 67.27% of the company's shares.
Of the total shares, 548 million were restricted shares, making up 74.20%, while 190 million were unrestricted, accounting for 25.80%.
Jiangnan Red Arrow stated that the capital raised would be used to support the development of Zhongnan Diamond’s main business and to fund the construction of a large diamond product production line in Nanyang. Specifically, 491 million yuan of the funds will be allocated to this project.
Before the transaction, the company primarily focused on producing internal combustion engine parts, with low profitability and inefficient capital utilization. Its debt-to-asset ratio was significantly lower than industry averages. After the restructuring, the company shifted its focus to the research, development, and sales of super-hard materials, leading to an increase in its debt-to-asset ratio, bringing it closer to the industry median.
Jiangnan Red Arrow projected that its operating income in 2013 would reach 2.35 billion yuan, with 2.262 billion yuan from core operations and 85.8281 million yuan from other businesses.
Prior to the issuance, the company's registered capital was 601 million yuan, and its business scope covered network engineering, electronic system construction, and computer software development. From January to September 2013, the company reported total revenue of 1.45 billion yuan and a net profit of 250 million yuan attributable to the parent company.
On December 11, Jiangnan Red Arrow closed at 12.60 yuan, a drop of 5.26%.
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