(Yicai) March 31 -- Shares of Tongwei dropped after the Chinese solar silicon material giant said it plans to pump CNY10 billion (USD1.4 billion) from external sources into its main business subsidiary to alleviate financial strain and enhance competitiveness amid plunging prices and likely swinging into the red last year.

Tongwei [SHA: 600438] closed down 4.3 percent to CNY19.13 (USD2.64) a share in Shanghai today, its lowest point in more than six months.

Tongwei's unit Yongxiang will receive investment from major domestic financial institutions through a capital increase, the Chengdu-based parent company announced on March 28. The funds will primarily repay the subsidiary's debt and bolster liquidity, it noted.

After the investment, Tongwei's stake in Yongxiang will drop to no less than 73 percent from 100 percent.

The final list of investors remains to be finalized, but Industrial and Commercial Bank of China Financial Asset Investment, Citic Financial Asset Management, and Yongan Futures have inked relevant agreements, Tongwei pointed out. Four more major banks or asset managers units are in final preparations to sign, while others await internal approvals, it said.

Yongxiang's annual high-purity polysilicon capacity exceeded 900,000 tons at the end of last year, up from 450,000 tons a year earlier, while leading the global market for several consecutive years.

Tongwei has hiked investments to expand solar-grade polysilicon production capacity in recent years. However, due to tumbling product prices, it expects a net loss of CNY7 billion to CNY7.5 billion (USD965 million to USD1 billion) in the 12 months ended Dec. 31, compared with a net profit of CNY13.6 billion the year before, it said in January.

Editor: Martin Kadiev