Liuzhou Chemical Industry Co said US hedge fund Steel Partners has signed a letter of intent to buy a stake of up to 48 percent in its state-run parent.

 

Steel Partners' Hong Kong unit will inject cash into Liuzhou Chemical's parent, becoming its strategic investor, the Chinese company said in a statement to the Shanghai Stock Exchange as its shares resumed trading yesterday.

 

After the foreign cash investment, the local government in Liuzhou, Guangxi Zhuang Autonomous Region, will maintain controller of Liuzhou Chemical's parent with interest of no less than 52 percent, the statement said.

 

The statement didn't say how much money Steel Partners would invest.

 

Liuzhou Chemical surged as much as 10 percent yesterday before closing up 1.2 percent at 25.38 yuan (US$3.4). It was last traded on October 19.

 

Liuzhou Chemical, mainly producing and selling chemical fertilizers, had 36.5 million yuan net profit in the third quarter, up 2.65 percent from a year earlier. The company is 38.91 percent owned by its parent, whose financial details were not immediately clear.

 

(Shanghai Daily November 1, 2007)