Former CITIC boss takes control of VDM

Former CITIC Pacific Mining chairman Dongyi Hua has paid $15 million to take a controlling 40 per cent stake in struggling engineering and construction contractor VDM Group.

VDM announced today it had entered a binding share subscription agreement, priced at 2.5 cents per share, with Dr Hua’s H&H Holdings Australia.

Dr Hua will be also appointed as VDM’s new managing director, while two H&H nominees will act as non-executive directors on the company’s board.

The placement remains conditional on VDM shareholder approval.

VDM Group shares have risen 36.3 per cent, or 0.4 cents, on the ASX following the announcement, with the stock trading at 1.5 cents at 10:15AM.

VDM said it expected the placement and appointment of Dr Hua would assist the company securing work opportunities in a flagging construction market.

“The funds will put VDM in a stronger financial position to bid and execute additional engineering and construction contracts in its key markets including Western Australia and Queensland,” the company said in a statement.

CITIC Pacific Mining is the China-backed developer of the giant Sino Iron magnetite project, nearing first production, south of Dampier.

VDM has been a contractor on the project.