China Metal Recycling targets HongKong listing

Archiv – China Metal Recycling, China’s largest scrap metal recycling company by revenue, is seeking up to HK$1.55 billion from its Hong Kong float. The Guangzhou-based firm plans to offer 300 million shares at a price ranging between HK$3.98 and HK$5.18 per share, according to market sources. The range represents 9.5 times to 12.3 times the earnings per share of 42 HK cents for the year ended December 31.China | China Metal Recycling, China’s largest scrap metal recycling company by revenue, is seeking up to HK$1.55 billion from its Hong Kong float. The Guangzhou-based firm plans to offer 300 million shares at a price ranging between HK$3.98 and HK$5.18 per share, according to market sources. The range represents 9.5 times to 12.3 times the earnings per share of 42 HK cents for the year ended December 31.
According to the preliminary prospectus, CMR will use about 60% of the net IPO proceeds to pay off the notes that were bought in 2007 by UBS and two hedge fund managers — Spinnaker and ADM. The notes carry a high coupon of 8.5% and are also highly restrictive in terms of how much other borrowings the company can take on. CMR told investors yesterday that it has already lined up other loan possibilities in the domestic bank market, which will not only be cheaper but will also come with a tax benefit.
China Metal posted net profit of HK$294.4 million in 2008, more than double the previous year’s HK$137.7 million. The company, which recycles both ferrous and nonferrous metals, such as iron, steel and copper, said it plans to invest HK$134 million this year, mainly on building new recycling plants to boost capacity.
The company’s existing recycling facilities are located in the Guangdong and Jiangsu provinces and in Hong Kong. It is also in the process of setting up a second facility in Jiangsu, as well as new facilities in the city of Tianjin and in the Zhejiang province, which are expected to be completed by the end of the third quarter this year and will almost double its annual production capacity to 3.1 million tonnes from 1.6 million at present. It also plans to open a new recycling facility in Hubei province in central China in 2010, which will increase the capacity to 3.6 million tonnes.