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China regulator says Unicom reform plan does not violate rules, shares surge

Posted by: Admin | Posted on: August 21st, 2017 | 0 Comments

HONG KONG (Reuters) – China Unicom’s $11.7 billion ownership reform plan does not violate rules, the nation’s securities regulator said, helping shares in the telecom group’s units surge as they resumed trade on Monday after speculation that the deal was under scrutiny.

The deal, in which Unicom’s Shanghai-listed unit will tap more than a dozen major investors, including Alibaba Group (BABA.N), Tencent Holdings (0700.HK) and Baidu (BIDU.O), for funds, had sown much confusion after it was first announced last Wednesday.

China Unicom had taken down a statement from the Shanghai stock exchange last week, citing technical issues, and shares in both units remained suspended last week.

But late on Sunday, the telecoms group reiterated it was planning to raise 77.9 billion yuan ($11.7 billion) through an ownership reform plan that has been billed as a model case for revitalizing Chinese state firms with private capital.

“After going through the relevant legal procedures with the National Development and Reform Commission (NDRC) and other departments, the China Securities and Reform Commission (CSRC) will treat the private placement in China Unicom’s ownership reform as an exceptional case,” the CSRC said in a statement late on Sunday.

Chinese media had speculated the deal violated rules on private placements in terms of deal size and pricing mechanism after the CSRC revised its rules in February.

Shares of China United Network Communications Ltd (600050.SS) surged 10 percent on Monday morning while those of the group’s Hong Kong unit, China Unicom Hong Kong Ltd (0762.HK) also climbed 10 percent to their highest level in more than two years.

China Unicom Hong Kong said in a statement on Monday that all the terms of the ownership-reform plan were consistent with those announced previously.

A source familiar with the deal said not everyone was on the same page when the announcement came out on Wednesday but all parties were now fully committed. The source, who was not authorized to speak to the media, declined to be identified.

($1 = 6.6700 Chinese yuan)

Additional reporting by Kane Wu and Sijia Jiang; Editing by Anne Marie Roantree and Edwina Gibbs

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