China Unicom shares still halted amid confusion over $12 billion fundraising

By Sumeet Chatterjee and Sijia Jiang

HONG KONG (Reuters) - China Unicom's two main units said on Thursday their shares would remain suspended until further notice, amid uncertainty over details of a $11.7 billion fundraising that is expected to be a model case for revamping state firms with private capital.

The development comes one day after the state-owned group announced it was raising the funds from about a dozen investors, including tech giants Alibaba Group, Tencent Holdings, Baidu, and JD.com.

The continued suspension runs counter to expectations that trading would resume soon after details of the fundraising were released. China Unicom's Hong Kong shares were suspended on Wednesday, while trading in its Shanghai-listed shares has been halted since early April.

One of the investors named by China Unicom denied on Thursday that it is participating in the deal.

And, adding to market confusion, the deal announcement was taken down from the Shanghai bourse website although it remained on the Hong Kong bourse's website as well as the website of the Hong Kong unit.

An official at China Unicom Hong Kong Ltd said the announcement was taken down from the Shanghai exchange due to "technical issues", but he did not elaborate. The company said trading in its shares will remain suspended pending an announcement.

China United Network Communications, the Shanghai-listed unit, did not immediately respond to Reuters requests for comment.

In a stock exchange filing late on Wednesday, the company said it would issue documents on the share placement within three trading days and would resume trade.

The Shanghai bourse also did not immediately respond to a faxed request for comment.

One of the 14 investors which were named by China Unicom's Hong Kong unit, rail equipment maker CRRC Corp Ltd, denied making an investment through the purchase of shares in the Shanghai-listed unit.

"According to verification results, the company did not participate in the afore-said subscription," it said in a notice to the stock exchange, referring to media reports about it being one of the investors.

A China Unicom spokesman in Hong Kong, however, said CRRC's clarification to the exchange stemmed from the fact that a wholly-owned unit of CRRC was the investor in the telecoms group and not the listed company itself.

CRRC officials in China could not immediately be reached for a comment after regular business hours.

The China Unicom fundraising is part of Beijing's push for state-owned enterprises to be revitalised with private capital. China Unicom is among the first batch of state-owned enterprises slated for mixed-ownership reforms.

The funds would be raised by the group's Shanghai unit via sale of new as well as existing shares, and investors will get a combined 35.2 percent stake in that company and will be allotted three board seats.

Edison Lee, analyst at brokerage Jefferies, said the flip-flop regarding the China Unicom deal announcement does not "affect the overall ownership reform plan". "But yes, it is weird. The announcement appears rushed," he said.

Jefferies earlier said in a note the diversified nature and representation of private investors was unprecedented for a Chinese state-owned enterprise, signifying the degree of support Unicom receives from the government.

(Reporting by Sumeet Chatterjee and Sijia Jaing; Additional reporting by Chyen Yee Lee, Xiaochong Zhang and Brenda Goh; Editing by Stephen Coates and Muralikumar Anantharaman)