CITIC Pacific bailout plea gets nod
Updated: 2008-12-20 07:39
By Hui Ching-hoo(HK Edition)
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CITIC Pacific chairman Larry Yung said on Friday that the company can tide over the financial crisis with the bailout by CITIC Group.
The proposal was passed on Friday night with more than 99 percent of the independent shareholders voting in favor of it.
Speaking on the sidelines of the special general meeting on Friday, Yung said that the company was in trouble after it revealed on Oct 20 a HK$15-billion loss from making wrong currency bets on the Australian dollar.
Following the incident, CITIC Pacific asked its parent CITIC Group to buy HK$11.6 billion worth of convertible bonds as bailout. The conversion price is HK$8 per share.
However, a shareholder who identified himself as Yip said: "The price was too low. I believe the net asset value per share of the company is about HK$22, so the bond should be at least worth HK$11 (conversion price), even it was given at a 50 percent discount."
Meanwhile, Independent equity analyst David Webb proposed to postpone the special general meeting by 14 days, but the proposal was turned down by the shareholders.
Criticizing the CITIC Pacific management, Webb said the company couldn't fulfil the inquiries from shareholders. He was in doubt that the company is committed to using its parent's injection as the sole solution.
Yung insisted that the price is reasonable. "The proposal is the best option I can get for the company. The coffers can not only resolve the company's financial difficulties, it can also beef up its capital condition ... The company will strive to develop property business in the future."
When asked whether Yung and managing director Henry Fan should resign, he said: "We have been asked about the same question by shareholders during the meeting ... but this decision has to be made through special procedures."
He also refused to comment on whether his daughter Yung ming-fong and Vernon Francis Moore, the company's chief financial officer, are accountable for the failed currency trading, noting relevant department is investigating the case.
Yip said that the minority shareholders may ask the financial secretary to look into any wrongdoing involved in the incident.
Shares of CITIC Pacific yesterday closed at HK$8.60, up 4.24 percent.
(HK Edition 12/20/2008 page2)