(Yicai Global) Jan. 18 -- Chinese display panel giant BOE Technology Group plans to raise CNY20 billion (USD3 billion) in a private placement of shares, 20 percent of which will be purchased by the Beijing government.

Beijing Jingguorui State-owned Enterprise Reform and Development Fund will be the lead investor, the firm said on Jan. 15. No other investor names or amounts were revealed. The new share price will not be less than 80 percent of the firm’s average stock price over the previous 20 trading days, it added.

Most of the money will be used to hike production of BOE's active matrix organic light-emitting diode and OLED panels, which are used in a wide range of electronic devices from television sets and computer monitors to smartphones, it said.

The Beijing-based company will use CNY6.5 billion (USD1 billion) to lift its stake in its Wuhan AMOLED plant to 47.14 percent from 23 percent and become the largest shareholder, it added. The factory in central Hubei province has been in operation for over a year and can produce 120,000 pieces a month.

CNY6 billion will go towards a new AMOLED production line in Chongqing, southwestern Sichuan province with a designed monthly output of 48,000 units. The first phase is expected to be ready by November and the whole project, costing CNY46.5 billion, should start production next December.

Another CNY1 billion will be invested in a OLED micro-display plant in southwestern Yunnan province for augmented and virtual reality display screens. Costing CNY3 billion, it is expected to start operation in January 2024 and should have an annual capacity of 5.23 million units.

BOE will use CNY3 billion (USD462 million) to repay loans to improve the firm’s gearing ratio, or the ratio of assets-to-debt, which stood at 57.72 percent as of last September, it said.

It will also use CNY500 million to build a digital hospital and a further CNY3 billion will go towards replenishing working capital, the firm added.

BOE’s stock price [SHE:000725] closed up 0.59 percent at CNY6.84 (USD1) today. Its share price has climbed 50 percent since the start of 2020. It reached a two-year high of CNY7.49 last week.

Editor: Kim Taylor