July 21 – Guangxia Yinhuan Industry (000557) held a conference regarding its latest bankruptcy restructuring plan yesterday, reports China Business News, citing a company filing. Both debt holders and investors rejected it, however.

According to one shareholder, the company’s small and mid-sized shareholders objected significantly to the restructuring scheme, saying the injected assets’ earnings cannot support the current share price.

Ningxia Nindong Railway Limited was to provide 320 million yuan in cash and would inject quality assets worth more than four billion yuan into Guangxia Yinhuan. Existing shareholders would then need to release shares to Ningdong Railway, and shareholders with more than 500,000 shares would be requested to release 18 percent of their holdings.

The average release ratio was an estimated 14.6 percent. Yinhua Industry claimed that the release ratio was relatively low for a firm requiring bankruptcy restructuring. The firm currently has no businesses operations.

The plan says that net profits for next three years could hit one billion yuan, for earnings per share of 0.2 yuan. Based on P/E of 20, the prices should be four yuan, compared to closing price of seven before share suspension.

Source:CapitalVue