CHINA POWER (ASX: 02380) has disclosed that its subsidiary, Spic Hydropower Co., Ltd. (ASX: 600292), has finalized the details of a proposed share placement.

The placement results were announced following the completion of necessary filing procedures with the Shanghai Stock Exchange.

Under the terms, approximately 384 million new shares will be issued to 15 placees at a price of RMB 11.36 per share.

The gross proceeds from the offering are expected to total around RMB 4.362 billion.

Allocation of Proceeds

The net proceeds, amounting to roughly RMB 4.328 billion, are earmarked for two primary uses.

These funds will finance the construction of a wind power project in Hunan Province and the Muwangxi pumped storage power station in Taoyuan County, Hunan.

A portion will also be used to replenish the subsidiary's internal capital, which was previously utilized to meet funding requirements related to an asset reorganization.

This earlier use of funds covered expenses such as cash consideration payments, intermediary fees, and relevant taxes.

Impact on Ownership Stake

Upon completion of this placement, the parent company's equity interest in Spic Hydropower Co., Ltd. will decrease from 55.13% to 50.69%.

This dilution is classified as a deemed disposal event under the relevant listing rules.

Strategic Rationale for the Move

The company anticipates that the successful placement will significantly benefit the subsidiary.

It is expected to bolster equity financing, reducing reliance on debt and thereby lowering the debt ratio and financing costs.

Furthermore, the move aims to broaden the shareholder base, enhance financial flexibility, and strengthen the subsidiary's capacity for sustainable development.