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HK's Guorun says to issue 100 mln shares

HONG KONG, March 19 (Reuters) - Investment holding firm Guorun Holdings Ltd said on Wednesday it would issue 100 million new shares to its substantial shareholder to raise HK$54 million for working capital and to finance a possible joint venture.

Proper Glory Holding Inc, the substantial shareholder, had also agreed to place the same amount of shares at the same price, or HK$0.55 a share, to independent third parties, the company said in a statement.

Guotai Junan Securities (Hong Kong) Ltd is the placement agent.

The subscription price represents a discount of about 1.79 percent of the stock's close of HK$0.56 on Monday.

Trading of the shares is expected to resume on Wednesday after being suspended on Tuesday pending the announcement.

Guotai said about HK$44 million of the proceeds will be used to partially meet the future funding requirement of its possible investment in Geely Group's Zhejiang Geely, which will be restructured into a joint venture or developed into a new joint venture.

Geely Group, China's sole private car maker, said last month that Guorun was set to invest HK$400-500 million (US$51-64 million) in the venture and take a 40 to 50 percent stake under an initial agreement.

The remaining HK$10 million will serve as working capital.

After the share placement and subscription Proper Glory's shareholding in the company will be diluted to 72.67 percent from 74.84 percent. (US$=HK$7.8)