Baosteel share buyback plan approved

A share buyback plan worth 5 billion yuan ($790 million) and a steel project in Zhanjiang were approved on Monday by the shareholders of Baoshan Iron and Steel Co Ltd.

Voting on the spot or via the Internet, 99.96 percent of shareholders approved the buyback plan, while 99.92 percent approved the Zhanjiang project, according to a company filing with the Shanghai Stock Exchange on Monday night.

Baosteel, China's largest listed steelmaker, announced a plan to buy back 1 billion outstanding shares at a maximum price of 5 yuan per share on Aug 28, becoming the first listed State-owned company to buy back shares in recent years.

Ma Guoqiang, general manager of Baosteel, said that the company looked forward to use up the 5 billion yuan quota in the buyback, according to a report in Caijing.com.cn.

The Shanghai-listed company is scheduled to repurchase 1 billion shares within 12 months, which means that 20 million yuan worth of shares will be bought back by the company each day, the equivalent to 40 percent of its recent average daily trading volume. As a result, the plan is expected to support Baosteel's stock price, according to Guotai Junan Securities.

Shareholders also approved a proposal to take over the Zhanjiang steel project in Guangdong province from parent Baosteel Group. The project is expected to cost 40 billion yuan in the initial construction phase. Baosteel will use 20 billion from the 45 billion yuan proceeds from selling special steel and stainless steel assets, while the rest will come from bank loans, said Ma.

Baosteel's shares closed flat at 4.63 yuan on Monday. Its stock price gained 13.7 percent after the buyback plan was announced on Aug 28.