Citic Securities Co has been forced to buy 407 million yuan (US$59.59 million) of shares in Shanxi Taigang Stainless Steel Co as the shares failed to be sold in an additional stock offering.

Taigang raised about 3.55 billion yuan by issuing 339 million shares and its underwriter Citic Securities purchased 39 million shares that investors didn't buy, the steel maker said in a statement to the Shenzhen Stock Exchange yesterday.

Citic Securities, the country's second-largest brokerage by market value, needed to pay about 407 million yuan for the Taigang shares at 10.47 yuan apiece.

Taigang will use the fund to construct a 1.5-million-ton stainless steel rolling mill, which will cost a total of 7.68 billion yuan.

The steel maker had invested 4.56 billion yuan in the mill last year.

The fund will also be used to repay bank loans and improve the company's financial structure, it said in earlier statement.

Other investors included the country's pension fund, Bank of China, Industrial and Commercial Bank of China, China Construction Bank, Shanghai Pudong Development Bank and China Life Insurance Co.

Haitong Securities Co, China's biggest brokerage by market value, bought a 26.6-percent stake in Shanghai Pudong Road & Bridge Construction Co earlier this month after failing to sell the contractor's shares in an equity offering.

Haitong paid 980 million yuan to buy more than 92 million shares.

(Shanghai Daily July 31, 2008)