(Yicai) Nov. 20 -- Xiamen Xiangyu, a Chinese bulk commodity trader, and its parent company XMXYG Corp. plan to purchase a majority stake in a new company set up by Zhongwang Group that holds the struggling aluminum processor’s main aluminum assets for CNY4.3 billion (USD593.8 million) in order to forge closer links between Xiamen Xiangyu’s aluminum manufacturer clients and the raw material supply.

The purchase will be made through a joint venture set up by Xiamen Xiangyu’s unit Xiangyu Smart Logistics Port and another company under XMXYG and which will have a registered capital of CNY4.3 billion, Xiamen Xiangyu said yesterday. Xiangyu Smart Logistics Port will invest CNY690 million for 16 percent equity, while the XMXYG subsidiary will pay CNY3.6 billion (USD497 million) in cash for a 83.9 percent stake.

Together with other investors introduced by XMXYG, the JV will take control of the spin-off. Zhongwang used to be the country’s biggest aluminum firm but it has been embroiled in a series of scandals such as fictitious sales and financial fraud since 2017. In April last year, creditors petitioned for the Liaoyang-based firm to enter bankruptcy reorganization.

This investment in Zhongwang’s aluminum assets will drive co-operation between Xiamen Xiangyu’s clients which make aluminum products and raw material suppliers, it said. This will boost the development of the aluminum industrial chain and is expected to bring good investment returns to the company.

XMXYG, which owns 51.1 percent of Xiamen Xiangyu, is one of the largest state-owned conglomerates in Xiamen. Its businesses span from logistics supply chain services, real estate and quasi-finance services to manufacturing.

Xiamen Xiangyu is also engaged in logistics services and the development and operation of logistics parks. Its share price [SHA: 600057] closed up 0.16 percent at CNY6.13 (USD0.85) today.

Editor: Kim Taylor