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 preceding the announcement of the first board resolution regarding the restructuring. The company raised a total of 1.323 billion yuan, with a net amount of 1.27 billion yuan after fees. This included an increase in registered capital by 137 million yuan, and 1.133 billion yuan was recorded as capital reserve – equity premium.
The 137 million A-shares were registered on December 11, 2013, under the names of nine specific investors, including ICBC Credit Suisse Asset Management Co., Ltd. After the issuance, Jiangnan Red Arrow had 738 million shares outstanding. The newly issued shares were subject to a lock-up period and became tradable starting on December 12, 2013.
The nine institutional investors who participated in the offering were: Beijing Infrastructure Investment Co., Ltd. received 13.84 million shares worth 134 million yuan; Shenyin Wanguo received 13.74 million shares valued at 133 million yuan; CCB obtained 18.59 million shares for 180 million yuan; ICBC Credit Suisse received 24.2 million shares totaling 234 million yuan; Anhui Tiejian Investment Fund and Anhui Investment each received 13.7442 million shares, amounting to 133 million yuan; Tsinghua University Education Foundation was allocated 15.5 million shares for 150 million yuan; Qingdao Jiahao received 14 million shares worth 136 million yuan; and Anhui State-owned Financial Investment received 9,357,500 shares valued at 90.581 million yuan.
Following the share issue, the top ten shareholders of Jiangnan Red Arrow were 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, accounting for 74.20%, while 190 million were freely tradable, making up 25.80%.
Jiangnan Red Arrow stated that the completion of the share issue would lead to an increase in total assets and net assets, as well as a reduction in the debt-to-asset ratio.
The funds raised were intended to support the development of Zhongnan Diamond’s core business and to finance the construction of a large diamond production line in Nanyang. Specifically, 491 million yuan of the raised capital would be allocated to this project.
Prior to the transaction, the company primarily focused on manufacturing internal combustion engine parts, which resulted in low profitability and inefficient capital use. Its debt-to-asset ratio was significantly lower than industry averages. Post-transaction, the company expanded into the research, development, and sales of super-hard materials, leading to a higher debt-to-asset ratio that aligned more closely with the industry median.
Jiangnan Red Arrow projected its 2013 operating revenue to reach 2.35 billion yuan, with main business revenue at 2.262 billion yuan and other business income at 85.8281 million yuan.
Before the share issue, 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, Jiangnan Red Arrow reported total operating revenue of 1.45 billion yuan, with a net profit attributable to the parent company of 250 million yuan.
On December 11, Jiangnan Red Arrow closed at 12.60 yuan, marking a decline of 5.26%.
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