Baoshan Iron and Steel Co Ltd, the listed unit of China's largest steelmaker, said it had no plan to sell new shares in a rights offer, quelling speculation that has recently pushed up its share prices.
Baoshan dismissed as untrue media reports that it will sell new shares priced at 3.5 yuan (42.17 US cents) each in a 1-for-3 placement.
The company also rejected speculation that the government will trim its ownership in the firm by selling state-owned shares to the public.
Local-currency shares of Baoshan Iron and Steel have gained 12.3 percent since June 21, its bottom this year compared with a 2.6 percent drop on the benchmark Shanghai Composite Index in the same period.
Investors have snapped up shares in the steelmaker, betting on substantial capital gains that would be created by the price gap between the market price and the offer price.
"The speculated offer price of Baoshan's new shares was very attractive, leaving a hefty price gap for investors," said analyst Sun Chao with Citic Securities Co Ltd.
"But I do not think that Baoshan needs too much capital to buy other assets from its parent, as the listed unit already includes the assets of best quality."
The Oriental Morning Post reported last week that Baoshan Iron and Steel, which is under Shanghai Baosteel Group Corp, will acquire assets worth up to 28 billion yuan from its parent and get listed as a whole group.
It was speculated the 1-for-3 placement was in line with Baosteel's plan to get listed as a whole.
Xie Qihua, chairwoman of Baosteel, said earlier the group will try to go public in the international market before 2010.
Shanghai Baosteel was crowned as one of the world's top 500 firms by Fortune in July with annual sales of 120.4 billion yuan in 2003.
Its annual production capacity topped 20 million tons last year.
"Achieving the goal to become one of the world's top 500 companies doesn't mark Baosteel's ultimate aim," said Xie. "Baosteel has an ambition to become one of the world's big-three steelmakers and get listed as a whole group on international markets by 2010."
Shares in Baoshan Iron and Steel decreased 1.17 percent to 6.75 yuan on the Shanghai stock market yesterday.