China’s largest investment conglomerate will inject $1.5bn into its Hong Kong-listed arm and relieve the company of currency contracts that could have cost it billions of dollars. China International Trust and Investment Corp will purchase convertible bonds in Citic Pacific that, when converted, will double its stake in the HK-based company to about 57%. The bonds are convertible at HK$8 a share, representing a 32% premium to their last close on Oct 31. While the deal will dilute existing shareholders, including Citic Pacific chairman Larry Yung and Power Corp of Canada, it will also see the Chinese state-owned parent take responsibility for currency contracts that Citic Pacific said last month could cost it $2bn and potentially much more. The bail-out highlights the close ties between Yung, Citic Pacific’s second largest shareholder, with a 19% stake, and China’s leadership. Yung is the son of China’s former “red capitalist” vice-president, Rong Yiren.

This entry was posted by Gwen Robinson on Thursday, November 13th, 2008 at 5:28 and is filed under Capital markets, People. Tagged with citic, Power Corp. Edit this entry.