Li companies selling HK$3.8b of holdings in Cosco and CSCL

PUBLISHED : Wednesday, 12 December, 2007, 12:00am
UPDATED : Wednesday, 12 December, 2007, 12:00am

Li Ka-shing's flagship companies are seeking to sell about HK$3.8 billion worth of shares in two leading mainland shipping firms, their latest disposals of H shares over the past three months.

Cheung Kong (Holdings) and Hutchison Whampoa hired JP Morgan to arrange the sale of 89 million shares in China Cosco Holdings at HK$24.80 to HK$25.20 each, a 5.44 per cent to 6.94 per cent discount to the stock's closing price yesterday, according to a term sheet sent to fund managers.

The offering, which could cash in up to HK$2.24 billion, will further cut the two companies' combined stake in China Cosco to 100.48 million shares or 3.89 per cent from 7.34 per cent of the shipper's issued H shares.

Meanwhile, Cheung Kong appointed UBS to handle the sale of 250 million China Shipping Container Lines (CSCL) shares at HK$6.06 to HK$6.19 each, a 3.43 per cent to 5.46 per cent discount to the stock's closing price yesterday, to raise up to HK$1.55 billion.

Cheung Kong's stake in Asia's second-largest container line will be cut to 4.09 per cent or 203.4 million shares from 10.75 per cent of CSCL's issued H shares.

CSCL has just closed the 15.5 billion yuan initial public offering in Shanghai and trading will debut today.

The stock is expected to jump at least 40 per cent to 9.30 yuan from its offer price of 6.62 yuan, according to Changjiang Securities.

Mr Li and his company have been trimming holdings in three H-share companies - China Cosco, CSCL and China Southern Airlines - since September. Including the latest offerings, the sales have raked in more than HK$8 billion.

Kenny Tang Sing-hing, an associate director at Tung Tai Securities, said the string of sales did not necessarily signal that Mr Li disliked the outlook for H shares.

'Other investment opportunities might have emerged and the two companies were only cashing in for that,' Mr Tang said.

Separately, an undisclosed investor hired Citigroup for the sale of about 43 million shares or 1.3 per cent of retailer Gome Electrical Appliances Holding's existing share capital. The sale price, at HK$17.28 to HK$17.83 per share, could raise about US$100 million.

The selling price was set at a 2.99 per cent to 5.98 per cent discount to the stock's closing price of HK$18.38 yesterday, a terms sheet said. Citigroup has an option to sell an additional US$50 million worth of Gome shares if demand warrants.