CITIC Pacific (0267)

This RTO serves as good example of SOEs securitization, which can be done by either IPO or RTO. RTO seems a faster and preferred way.

Similar RTOs will happen, not only with SEHK's, but also with SGX's listed companies, IMO.

(not vested)

CITIC Group plans HK listing by reversing into CITIC Pacific

HONG KONG, March 26 (Reuters) - Chinese state-owned conglomerate CITIC Group Corp plans to list its main operating arm in Hong Kong by reversing into its CITIC Pacific subsidiary in a deal valuing the combined listed group at $42 billion.

Steel-to-property conglomerate CITIC Pacific, which is listed in Hong Kong, will purchase 100 percent of CITIC Ltd, the conglomerate's main operating arm, using a combination of new shares and cash, it said in a securities filing on Wednesday.

CITIC Pacific will issue an undisclosed number of shares at a price of HK$13.48 each, equivalent to a 6.5 percent premium to its Monday close of HK$12.66, subject to a definitive agreement.

CITIC Ltd had total equity of about 225 billion yuan ($36.3 billion) at the end of 2013. Together with CITIC Pacific's equity valued at $5.96 billion, the combined listed group would be worth $42.3 billion, making it the biggest backdoor listing ever in Hong Kong.
...
http://www.reuters.com/article/2014/03/2...TN20140326

More info on the deal to buy its parent's asset.

(not vested)

CITIC Pacific says to buy parent’s main unit for S$45.6 bln

HONG KONG – China’s CITIC Pacific has agreed to buy the main operating unit of its parent, state-backed CITIC Group, for 226.93 billion yuan (S$45.6 billion) in a stock and cash deal.

CITIC Pacific will pay 49.92 billion yuan in cash and issue shares worth 177.01 billion yuan to CITIC Group, the CITIC Pacific said in securities filing with the Hong Kong stock exchange on Wednesday.

Under the deal, first flagged last month, CITIC Pacific will acquire CITIC Ltd, which has businesses in China ranging from real estate to banking, securities, infrastructure, energy, natural resources and engineering. It made a net profit of 34.3 billion yuan in 2013.

CITIC Group was established in 1979 by Rong Yiren, one of the few industrialists to stay behind 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, including commercial lender China CITIC Bank Corp. REUTERS
http://www.todayonline.com/business/citi...t-s456-bln

This is financial engineering. Get holding company listed then raise money without losing control of subsidiaries.

(17-04-2014, 01:42 PM)opmi Wrote: This is financial engineering. Get holding company listed then raise money without losing control of subsidiaries.

I disagree. There are real asset transfers, instead of just playing with numbers.

The historical earning of CITIC Ltd was approx 34 bil yuan, and it is acquired with approx 227 bil yuan, i.e. a PE of approx 7. It is definitely a good deal to the company, especially most of it paid by shares.

(not vested)

(17-04-2014, 03:53 PM)CityFarmer Wrote:

(17-04-2014, 01:42 PM)opmi Wrote: This is financial engineering. Get holding company listed then raise money without losing control of subsidiaries.

I disagree. There are real asset transfers, instead of just playing with numbers.

The historical earning of CITIC Ltd was approx 34 bil yuan, and it is acquired with approx 227 bil yuan, i.e. a PE of approx 7. It is definitely a good deal to the company, especially most of them paid by shares.

(not vested)

No. I dont mean it is a scam. The asset transfers will be real. Just creating an extra layer for fund raising. Seriously, most of the assets are already listed.

By listing and selling shares in Citic Ltd, it is getting money without losing control.

This share used to trade between $10 and $12 level ; and during the last 2 years came down to $5.80 level in Jan 2021.

The share price has partially recovered and now standing around $8.63 on 5.6% yield.

Is it possible to return back to previous $10-$12 levels within 12 months time ?

(13-05-2021, 07:55 PM)soros Wrote: This share  used to trade between $10 and $12 level ; and during the  last 2 years  came down  to  $5.80  level  in Jan 2021.

The share price has partially recovered  and now standing  around $8.63 on  5.6% yield.

Is it possible to return back  to  previous  $10-$12 levels within 12 months time ?

Any reason why it came down to $5.80 and then rebounded?

During 2016 to mid.2019 , the price trading range was between $11 and $12.

During the 18 month period from mid 2019 to Jan 2021 , Trump was calling on all US companies to withdraw from China and some companies followed his call causing the share price to decline . Trump lost the presidential election in Dec 20120 and rioting at the Capital on 6 Jan 2021, caused investors to realise Trump's influence was declining; and the share price started to trend upwards.

That is my thinking , but nobody knows the real reason for price decline and rebound.

I thot they have a big Australian mine investment that was killing them? Frog may have turned into Prince Charming.

opmi,

This investment happened in 2008 and some information comes from : https://webb-site.com/articles/citicbomb.asp

The losses involve exotic foreign exchange forward contracts such as "dual currency target redemption forward contracts", where they get a limited upside (due to a knock-out clause) and an unlimited downside, being required to take the weaker of the Australian dollar and Euro. Another series of "AUD target redemption forward contracts" involves receiving up to AUD9.05bn in monthly installments up to October 2010. The counter-party bank(s) for these contracts have not been disclosed, and CP did not say when the contracts were entered into. They should tell investors how long this time-bomb was ticking. If the exposure pre-dates the interim report for 30-Jun-08 or even the audited annual report for 31-Dec-07 then it raises additional questions. On this, the two reports said (p120 of the annual report):

"The functional currency and future cash flow for Group's Australian Iron Ore Mining project is denominated in USD. Substantial portion of the project infrastructure / pre-completion operating expenditure is projected to be denominated in non-USD currencies. Foreign exchange forward contracts and structured forward instruments are employed to hedge or minimise the non-USD currency exposure."

The company survived, but the Chairman Larry Yung left the company.