China's Datong Coal May Revise $388m Mine Deal

Datong Coal Industry Co, one of China's biggest coal producers, said on Monday that a 2.65 billion yuan (元)($388m) deal for it to buy a coal mine might be cancelled or revised because of poor market conditions.

The company announced in mid-August that it would issue up to 120 million new shares to its state-owned parent group at 元22.08 each in exchange for mining rights and other fixed assets in one of the parent's five mines.

The deal was expected to launch a process of transferring all of the core assets of the Datong group into the listed company, Chinese media said.

But the company's share price has plunged since the deal was announced because of a tumbling Chinese stock market and sliding global coal prices. Datong Coal shares ended Friday at 元11.82, down 50% from 元23.77 in mid-August.

"Recently, major changes in the market environment have created great risks for this large asset restructuring," Datong Coal said in a statement on Monday.

"We do not rule out the possibility of our board or the Datong group cancelling or suspending the restructuring, or altering it materially," it added without elaborating.

by Andrew Torchia, Reuters.