China Unicom’s CNY78 billion (USD11.7 billion) mixed ownership reform plan has been green-lit by the China Securities and Reform Commission (CSRC), after a series of confusing announcements from the group last week prompted speculation that the proposal violated China’s rules for private placements. Under the plan, strategic investors will take a roughly 35.2% stake in the group’s Shanghai-listed unit, Unicom A Share Company, through the issuance of around 9 billion new shares and the sale of 1.90 billion shares by Unicom Group, at a price of CNY6.83 per share. Employees of the company, meanwhile, are to be offered around 850 million restrictive shares at a rate of CNY3.79 per share. Following the transaction, Unicom Group will hold a 36.7% stake in Unicom A Share Company, whilst strategic investors will hold 35.2%, and publish shareholders another 25.4%, with the final 2.7% held by employees. For its part, Unicom A Share Company holds an 82.1% stake in China Unicom (BVI), which in turn owns 40.6% of the group’s Chinese telecoms operating arm, referred to by the group as Unicom OpCo.
Plans for the deal were posted announced to the Shanghai Stock Exchange on Wednesday last week before being taken down, sparking rumours that the deal had fallen afoul of the nation’s regulatory bodies. Reuters reports that in a statement on Sunday, however, the CSRC clarified the matter stating that: ‘After going through the relevant legal procedures with the National Development and Reform Commission (NDRC) and other departments, the CSRC will treat the private placement in China Unicom’s ownership reform as an exceptional case.’ Unicom’s new strategic investors include internet firms Tencent, Baidu, JD.com, Alibaba and Suning.
Unicom OpCo will use the proceeds of the sale to enhance its 4G capabilities, invest in innovative businesses, conduct 5G technical network tests and build pre-commercial trial networks.