HONG KONG China Hongqiao Group Limited said on Tuesday it has terminated plans to subscript non-public A shares of Loften Environmental Technology Co and sell Loften the entire equity interest in Innovative Metal, as the plans did not comply with regulatory rules.
Chinese regulators have turned their sights on controlling risks in financial markets as speculative activity and leverage in the economy rise, with the securities regulator vowing to clear out "abnormal phenomena" from capital markets.
Hongqiao announced in December its subsidiary has entered into an agreement with Loften to subscript up to 1.6 million non-public A shares, representing 63.41 percent of the enlarged issued share capital, at 6.23 yuan per share, after buying 28.2 percent issued shares.
The aluminum company also agreed to sell Innovative Metal to Loften for 7 billion yuan ($1.02 billion).
Hongqiao said the acquisitions did not comply with private placement rules and the new regulatory requirements issued by China Securities Regulatory Commission in February.
"After considering the condition of domestic capital market, the new changes of regulatory policies and based on the communication with relevant domestic regulatory authorities, Shandong Hongtuo and Loften entered into the Termination Agreement to terminate the Acquisitions," it said in a statement.
(Reporting by Clare Jim; Editing by Stephen Coates)