EMERGING MARKETS INVESTOR: DR NEWS
By Gordon Platt
China Steel, Taiwan’s biggest steelmaker, raised $751 million in a follow-on offering of global depositary receipts (GDRs).
The issue was the largest equity offering by a Taiwanese company in the past four years.
Credit Suisse and J.P. Morgan were the lead underwriters for the issue, which was priced at $19.67 per GDR, at the bottom of the predicted range. Each GDR represents 20 ordinary shares listed on the Taiwan Stock Exchange. Including a 10% tranche of common shares sold to the company’s employees, China Steel raised a total of $826 million.
Citi Depositary Receipt Services has been the depositary bank for China Steel’s Luxembourg Stock Exchange–listed GDR program since it began in May 1992. The bifurcated program comprises a Rule 144A facility for qualified US institutional buyers and a Rule 144A facility executed outside of the US.
It will use the proceeds to fund expansion at home and the purchase of raw materials overseas. It may also use some of the proceeds to fund a second blast furnace, already under construction, at its Dragon Steel subsidiary in Taichung. China Steel could also use some of the money raised in the follow-on equity offering to fund expansion of its cold-rolled coils production for the automotive industry. Established privately in 1971, China Steel became state owned in 1977. It was reprivatized in 1995, but the government of Taiwan still holds stock and appoints the chairman of the company.
