Maanshan Iron & Steel (HKG:0323, SHA:600808) agreed to sell its 92% stake in Ma Steel (Cihu) Processing and Distribution to the controlling shareholder, Magang Group, for 136.3 million yuan, according to a Hong Kong bourse filing.

Ma Steel (Cihu) is engaged in the processing, distribution and warehousing of cold-rolled steel, galvanized steel, silicon steel and color-coated steel.

Maanshan Iron & Steel will receive the consideration in cash within 10 business days after the agreement takes effect.

Upon completion, the company will no longer hold an interest in the company, and it will cease to be consolidated in its financial statements.

Maanshan Iron & Steel expects to recognize a gain of 136.3 million yuan from the disposal, subject to audit. The proceeds will be used to supplement working capital.

The transaction is a connected transaction because Magang Group directly holds about 48.49% of Maanshan Iron & Steel.