China Hongqiao cancels acquisition plans due to regulatory incompliance

HONG KONG, April 18 (Reuters) - China Hongqiao Group Limited

said on Tuesday it has terminated plans to subscript

non-public A shares of Loften Environmental Technology Co

and sell Loften the entire equity interest in

Innovative Metal, as the plans did not comply with regulatory


Chinese regulators have turned their sights on controlling

risks in financial markets as speculative activity and leverage

in the economy rise, with the securities regulator vowing to

clear out "abnormal phenomena" from capital markets.

Hongqiao announced in December its subsidiary has entered

into an agreement with Loften to subscript up to 1.6 million

non-public A shares, representing 63.41 percent of the enlarged

issued share capital, at 6.23 yuan per share, after buying 28.2

percent issued shares.

The aluminium company also agreed to sell Innovative Metal

to Loften for 7 billion yuan ($1.02 billion).

Hongqiao said the acquisitions did not comply with private

placement rules and the new regulatory requirements issued by

China Securities Regulatory Commission in February.

"After considering the condition of domestic capital market,

the new changes of regulatory policies and based on the

communication with relevant domestic regulatory authorities,

Shandong Hongtuo and Loften entered into the Termination

Agreement to terminate the Acquisitions," it said in a


($1 = 6.8800 Chinese yuan renminbi)

(Reporting by Clare Jim; Editing by Stephen Coates)