* Citic Pacific in talks with Singapore's Temasek about
* Shareholders set to vote on the deal on June 3
(Adds details of fund raising, background)
May 14 China's state-backed Citic Pacific Ltd
said on Wednesday an independent financial advisor had
found the terms and conditions of its proposed acquisition of
some of its parent's assets "fair and reasonable".
Under the proposed deal terms first announced last month,
Citic Pacific is buying assets valued at 226.99 billion yuan
($36.4 billion) from its parent CITIC Group, up slightly from a
previous 226.93 billion yuan, the company said, citing the value
approved by China's Ministry of Finance (MOF).
The deal is the biggest injection by any Chinese firm into a
Hong Kong listed company, Reuters previously reported, and is
part of China's economic reforms aimed at making its vast
state-owned enterprises more efficient..
Citic Pacific's independent board panel has recommended that
shareholders vote for the deal, the company said in a statement
to the Hong Kong stock exchange.
Citic Pacific will pay 49.98 billion yuan ($8.0 billion)in
cash and issue 177.01 billion yuan worth of shares to CITIC
Group at a price of HK$13.48 each. It will also sell another
4.68 billion shares to institutional investors to comply with
the Hong Kong stock exchange's requirement to maintain a minimum
free float of 25 percent.
Citic Pacific's shares rose 1.3 percent to HK$13.92,
outstripping a rise of 1 percent in the benchmark Hang Seng
index. Citic also said it was in talks with Singapore
state investor Temasek Holdings, among others, to raise
capital through a share placement to part-fund the acquisition
of Citic Group.
CITIC Group, China's oldest and biggest financial
conglomerate, was established in 1979 by Rong Yiren, one of the
few industrialists to stay on in the mainland after the 1949
revolution. The company was set up with the support of former
leader Deng Xiaoping, and now has 11 stock market-listed
The purchase will give a much-needed boost to Citic
Pacific's ailing finances after it miscalculated the huge cost
of developing a mine in Western Australia.
The deal needs to be approved at a shareholders' meeting on
June 3, and is expected to be completed by Aug. 29, CITIC
Pacific said. As part of the deal, the company proposes to
change its name to CITIC Ltd.
($1=6.2291 Chinese Yuan)
(Reporting by Anne Marie Roantree, Denny Thomas and Elzio
Barreto; Editing by Clarence Fernandez)