Baosteel says to launch a $644 million exchangeable bond
SHANGHAI (Reuters) - China's Baoshan Iron and Steel Co Ltd (Baosteel) (600019.SS) plans to issue 4 billion yuan ($644.05 million) of bonds which can be exchanged for a portion of New China Life Insurance's 01336.SS shares, the steel maker said on Friday.
Baosteel, which owns 15.11 percent of the insurer, said in a statement that the exchangeable bond will help to reduce its borrowing costs, diversify its financing channels and revitalize its financial assets.
Under Chinese regulation, firms can issue bonds with an embedded option to exchange the bond for another company's stock a year after the issuance.
Baosteel's net profit for 2013 dropped 42 percent from the previous year to $936.75 million. The company has said that China's steel industry will continue to generate tiny profits with no big improvement in sight.
Chinese steelmakers are facing their toughest period since the global financial crisis as they battle sluggish demand growth, massive output surpluses and mounting environmental protection costs as Beijing pushes to restructure its bloated industries.
($1 = 6.2107 Chinese Yuan)
(Reporting by Fayen Wong and Shanghai newsroom; Editing by Stephen Coates)