Shares of Yunnan Energy New Material rebounded after the major Chinese supplier of battery separators terminated its plan to buy CNY2.6 billion (USD355.3 million) worth of shares of a unit from investors, including the chairman's wife, and announced that its executives intend to purchase no more than CNY400 million (USD54.7 million) of the parent's equity.

Yunnan Energy [SHE: 002812] closed 6.9 percent higher at CNY67.54 (USD9.20) with a market value of CNY66 billion (USD9 billion), still almost 50 percent lower than what it was at the beginning of this year. On Oct. 26, the stock slumped to a three-year low.

Considering many factors in the current market situation, Yunnan Energy will no longer pursue its latest plan to buy equity in its unit called Shanghai Energy, the Yuxi-based firm said in a statement yesterday, one month after receiving a letter of concern from the Shenzhen Stock Exchange.

Yunnan Energy also announced yesterday that some of its directors, supervisors, and senior managers plan to increase their holdings of the parent company to the tune of CNY200 million to CNY400 million within six months.

The scrapped plan involved Chairman Paul Xiaoming Lee's wife Yan Ma. The idea was to purchase 3.25 percent of shares from Yan, and 1.53 percent from Alex Cheng, related parties, by using the parent's funds. Yan would have gained CNY1.8 billion if the transaction was completed, based on public information.

The Shenzhen bourse sent a letter to Yunnan Energy after the firm said on Sept. 28 that it would purchase the combined nearly 4.8 percent stake in the unit for CNY2.6 billion, 370 percent higher than the appraisal price of Shanghai Energy. The bourse asked the firm to explain the rationality and necessity of the purchase and why it has not disclosed a performance compensation commitment, a deal between the buyer and the target company to agree on obligations and rights following an acquisition, and whether it has enough funds for the transfer.

The actual controllers of Yunnan Energy are six members of Lee’s family, and five of them are American citizens, including Lee himself. The only Chinese national is Deputy Chairman Li Xiaohua. According to this year's Hurun Global Rich List, the Lees own CNY58 billion worth of assets.

Before this, Chairman Lee, the controlling shareholder, and Deputy Chairman Li increased their holdings by about 2.1 million shares for CNY194 million from June 27 to July 17.