Shares in China Rongsheng Heavy Industries Group Holdings, the heavily indebted shipbuilder, rose 16 per cent on Thursday as it said it would raise as much as HK$3.2bn ($417m) to develop new energy businesses.
The private sector company has been closely watched as a test-case of the Chinese government's willingness to let firms go under as economic growth slows, putting further strain on heavy industries already struggling with chronic overcapacity. Rongsheng's shipyards in eastern Jiangsu province are major employers for the local economy, writes the FT's Tom Mitchell in Beijing.
In a filing to the Hong Kong stock exchange on Wednesday night, Rongsheng said it would sell convertible warrants to Wang Ping, a private equity investor, and change its name to China Huarong Energy Co.