November 16 -- Electric equipment producer Shanghai Zhixin Electric (600517.SH) plans to issue 60.41 million shares in a private placement to State Grid Electric Power Research Institute, a company affiliated to the State Grid, in order to purchase stakes in nine non-crystalline alloy enterprises from the latter, reports Shanghai Securities News, citing a company filing.

The issue price was fixed at 11.4 yuan per share, equivalent to the 20-day average stock price of Shanghai Zhixin Electric prior to the suspension of share trading.

The nine non-crystalline alloy enterprises produce non-crystalline alloy transformers.

The assets to be transacted have an assessed value of 689 million yuan, representing a premium of 58.76 percent compared to the assets’ book value of 434 million yuan as of June 30, 2011.

The assets to be transacted recorded return on net assets of 37.13 percent in 2009, and 29.64 percent in 2010.

According to consolidated financial data, the assets to be transacted generated operating revenue of 1.399 billion yuan and net earnings of 22.14 million yuan in the first three quarters of 2011.

During the same period, Shanghai Zhixin Electric posted revenue of 968 million yuan and net earnings of 133 million yuan.

State Grid Electric Power Research Institute will purchase 36.375 million shares of Shanghai Zhixin Electric from Shanghai Zhixin Group, the largest shareholder of Shanghai Zhixin Electric, 54.653 million shares from Shanghai Electric Power (600021), the second-largest shareholder of Shanghai Zhixin Electric, and another 18.218 million shares from Orient International Holding, fifth-largest shareholder of Shanghai Zhixin Electric.

Following the transactions, State Grid Electric Power Research Institute will become largest shareholder of Shanghai Zhixin Electric, with a stake of 24.98 percent.