Jan. 27, 2011 (China Knowledge) - China's Hunan Valin Steel Co Ltd<000932>, which is engaged in the smelting, manufacture and sales of iron and steel products, has announced that it plans to issue 270 million shares at RMB 5.57 apiece to China Valin Group in a private placement.

The company said in a statement filed with the Shenzhen Stock Exchange that China Valin Group will pay the deal by using a 5.48% stake in Hunan Valin Xiangtan Steel Ltd and a 5.01% stake in Hunan Valin Lianyuan Steel Ltd, plus RMB 428.46 million in cash.

The stakes in the two companies are worth a total of RMB 1.12 billion.

China Valin Group and Arcelor Mittal currently each hold a 33.92% stake in Valin Steel. Upon the completion of the private placement, Valin Group will become the largest shareholder as Arcelor Mittal will not participate in the placement.

Valin Steel said earlier that it expected to see a net loss between RMB 1.8 billion and RMB 2 billion last year, due to high ore purchase cost, new production lines at initial operation period and the transformation of product structure, China Knowledge reported earlier.