OSLO (Reuters) -Shares of Swedish automaker Volvo (OTC:VLVLY) Cars fell as much as 14% to a record low on Friday after its majority shareholder, China's Geely, sold a small part of its stake at a deep discount to the previous day's closing price.
Geely on Thursday launched a placing of 100 million Volvo Cars shares, which the deal's bookrunners said after the market close were sold at around 37 Swedish crowns each, or $350 million in total. The stock had closed at 40.84 crowns.
The sale of the 3.4% stake leaves Geely with a holding in Volvo Cars of 78.7%, the Chinese company said in a statement.
"The placing will increase the free float and further broaden the shareholder base of Volvo Cars. Proceeds received by Geely Holding are intended to be used to support business development within the group," it added.
None of the cash from the share sale went to Volvo Cars.
"This increase in our public float and improvement in trading liquidity benefits both new and existing investors. It allows a wider base of shareholders to invest in Volvo Cars," the Swedish company's CEO Jim Rowan said in a statement.
Volvo Cars declined to comment further on the share sale.
At 0926 GMT, Volvo Cars shares were down 10.9% at 36.38 crowns, having traded as low as 35.25 crowns.
Goldman Sachs, BNP Paribas (OTC:BNPQY) and SEB were bookrunners for the transaction, Geely said.
Geely Holding has committed to a lock-up period of 90 days for its remaining shareholding, "subject to customary exceptions and waivers" by the bookrunners.