Newbridge-controlled lender sweetens offer

PUBLISHED : Thursday, 24 May, 2007, 12:00am
UPDATED : Thursday, 24 May, 2007, 12:00am

Shenzhen Development Bank, a mainland lender controlled by United States buyout firm Newbridge Capital, has sweetened its second plan to compensate minority shareholders for making all state-owned shares tradable.

The bank said it would increase the offer of call warrants by half to 313 million, or 1.5 shares for every share held, to minority stakeholders who owned a combined 72 per cent of tradable shares.

The exercise price was cut to 19 yuan from the 19.89 yuan proposed on May 23.

Half of the warrants could be exercised in 12 months from the original nine months, while the rest remained exercisable in six months.

'The adjustments address the main requests made by holders of tradable shares and provide them attractive benefits after the share reform,' Shenzhen Development Bank said.

Shenzhen Development Bank is one of the mainland's largest-listed firms.

However, it has yet to complete a share reform deadline mandated for the end of last year by the China Securities Regulatory Commission.

The reform aimed at solving one of the legacies of a state-planned economy as the market gradually opens to foreign investors.

Holders of state-owned shares, usually the majority shareholders of listed firms, need to compensate other shareholders to win their approval for the reform.

Companies that have not completed the reform cannot raise funds in the market, which put Shenzhen Development Bank in a dilemma because it needs money to boost its 3.7 per cent capital adequacy ratio to the required minimum 8 per cent.

The lender made its first compensation proposal in July last year by offering a maximum 48 fen in cash for every 10 shares held by stake owners, which was rejected.

A shareholder meeting for the new plan is expected to be held on June 6. The stock will start trading from tomorrow until its suspension on June 1.

Trying again

The lender is one of the largest listed firms yet to complete share reform

Number of call warrants to be offered by the bank under the improved terms: 313m