[财经英语角区] China Railway Drops Share Placement Plan [推广有奖]

SHANGHAI—China Railway Group Ltd. has scrapped a planned 6.24 billion yuan ($972 million) share placement, the latest sign that China is slowing the expansion of high-speed rail construction after a deadly train crash in July.

The move deals another blow to China's railway industry after 40 people died in a train crash last month near the eastern city of Wenzhou. The incident sparked concerns about the safety of China's fast-growing high-speed rail sector and raised questions about the government's attention to safety.

State media reported Wednesday that China's cabinet has decided to suspend approvals of new rail construction projects, and will conduct a safety review of the country's high-speed rail system. It also called for rail speeds and fares to be lowered on its high-speed lines.

China Railway, a major builder of railways in the country, said Thursday it abandoned the plan because the deal had failed to win government approval before a deadline expired.

The Hong Kong-listed company said in June last year it would issue up to 1.54 billion yuan-denominated Class A shares at a price of no more than 4.05 yuan (63 U.S. cents) each to 10 designated investors. It planned to use the proceeds to fund its construction of a subway in Shenzhen and a toll road in the southern province of Guangxi.

Shareholders of China Railway approved the deal on Aug. 12, 2010, and the deal was scheduled to be completed within 12 months of the shareholders' approval.

However, "due to the changes in China's macroeconomic policies, there are uncertainties in relation to the obtaining of the relevant government approvals and as a result the proposal hasn't been implemented," China Railway said in a statement to the Shanghai Stock Exchange.

"The proposal has therefore lapsed automatically due to the expiration of the resolutions passed at the shareholders' meeting," the company added.

CSR Corp., which built the two trains involved in the July 23 rail crash, said last week it would postpone a shareholders' meeting to vote on a planned 11 billion yuan private share placement. China CNR Corp., another major bullet-train maker, said Wednesday one of its subsidiaries has been ordered to halt delivery of certain high-speed trains due to safety concerns.