Xugong says Carlyle Capital woes won't affect deal

SHANGHAI, March 20 (Reuters) - The insolvency of Carlyle Capital CARC.AS will not affect U.S. equity fund Carlyle's proposed move to buy into China's top machinery maker, Xugong Group Construction Machinery Co (XGCM), the listed arm of the Chinese firm said on Thursday.

Carlyle Capital and Carlyle Xugong, which is controlled by a Carlyle investment fund in Asia and has proposed taking a stake in XGCM, are independent entities with no business relations, Xuzhou Construction Machinery Science & Technology 000425.SZ said in a statement.

The insolvency of Carlyle Capital will therefore not affect the Carlyle Asia fund's investment activities, it said.

The U.S. firm has been awaiting government approval to take a stake in XGCM for more than two years, amid rising domestic concerns that the country may be ceding control of key industrial assets to foreigners too cheaply.

It has cut the size of its proposed stake in XGCM twice, from 85 percent to 50 percent, and again to 45 percent, but has yet to receive the official go-ahead.

Xuzhou Construction added on Thursday that the Carlyle fund had sufficient financial resources and was preparing to complete the deal. (Reporting by Fang Yan; Editing by Edmund Klamann)