China Strategic calls off bid for Pacpo and HKBLA
CHINA Strategic Investment's attempt to take controlling stakes in Pacpo Holdings and Hongkong Building and Loan Agency (HKBLA) has collapsed following objections lodged by a group of creditors.
The hitch to the $170 million deal emerged late last week when five of the eight lenders behind a revolving $435 million facility granted to HKBLA in June last year objected to the change of beneficial ownership of the company.
News of their objection was passed on to HKBLA on Wednesday by Schroders Asia, the agent for all eight, and there was no change in their stance by Friday afternoon - the deadline for acceptance.
A meeting of all the parties involved in the deal was called but Schroders confirmed it was highly unlikely that the lenders would reconsider their decision, even if more time was allowed.
As a result, China Strategic decided to pull out of the sale and purchase agreement and abandon its plans for a general offer to shareholders in both companies.
Minority shareholders in Pacpo would have been offered $3.82 a share while HKBLA minorities would have been offered $20.43.
The deal was announced on December 10 with China Strategic saying it was buying the entire issued share capital of Red Hill Co, a subsidiary of Pacific Concord, which held, as its sole asset, a 69.44 per cent stake in Pacpo.
Highly-diversified, Pacpo includes a 67.6 per cent stake in HKBLA among its portfolio of property and manufacturing interests.
A statement issued by China Strategic yesterday reported that Pacific Concord had offered to extend the deadline for meeting the conditions of the deal but China Strategic's directors had decided to pull out as they did not think that further discussionswould lead to ''any fruitful result''.
They also wanted to avoid any prolonged uncertainty on the acquisition.
The company has asked Pacific Concord to return immediately the $50 million deposit paid at the signing of the preliminary agreement last month along with the accrued interest.
China Strategic has had a number of changes of ownership in its own right in recent years. Formerly known as Ruby Holdings, it was briefly owned by Bond Corp International before being sold to Indonesian tycoon Oei Hong Leong and the Sinar Mas group in September 1991.