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UPDATE 1-Citic Pacific advisor says terms for acquisitions from parent "fair"
May 14, 2014 / 9:59 AM / 4 years ago

UPDATE 1-Citic Pacific advisor says terms for acquisitions from parent "fair"

* Citic Pacific in talks with Singapore’s Temasek about raising funds

* Shareholders set to vote on the deal on June 3 (Adds details of fund raising, background)

May 14 (Reuters) - 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 entities.

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)

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