(Reuters) – China Huarong Asset Management is a Chinese state-owned asset manager. It announced on Wednesday that it will be receiving fresh capital of 42 billion yuan ($6.59billion), from a Citic Group-led consortium as part of a restructuring strategy.

Huarong plans to issue up to 39.22 trillion domestic shares, and no more than 1.96 Billion shares on the Hong Kong stock exchange, to investors that include China Cinda Asset Management, Citic Group and China Life Insurance.

Huarong indicated that the Issuance was the best practical solution to capital insufficiency problems and meets regulatory requirements in filings to Hong Kong Stock Exchange.

Citic Group will assume control of China’s embattled asset management company as part regulators’ plan for financial holdings groups to replace financially insolvent state asset managers.

Citic Group will not subscribe to more than 18.82 million shares of Huarong, while China Cinda stated in separate statements that it would pay approximately 4 billion Yuan for a 4.89% share in Huarong.

Huarong is one of four distressed state debt managers. It counts China’s financial ministry as its largest shareholder.

According to Reuters reports, bond prices rebounded following the rescue plan by the state and subsequent divestment transactions. The deals were part of a regulatory effort to dispose non-core assets.

Huarong announced Wednesday that it will sell the 40.5% Huarong Xiangjiang Bank stake and the 79.9% financial leasing unit stake. Similar divestment plans were previously announced in the consumer finance and securities units.

Huarong received approval Tuesday to raise financial bonds worth 70 billion yuan in the interbank marketplace. It continues its recovery of credit and will refocus its focus on its principal bad loan business.

Huarong reported in August that it had a profit of 158.3 millions yuan (or $24.5 million) for the first half 2021 and lost nearly $16 billion for 2020.

($1 = 6.3780 renminbi)