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SCMP Reporter

ROBERT Fleming is issuing covered warrants worth $144 million on Cheung Kong Holdings, almost identical to an issue aborted on Friday by Barclays de Zoete Wedd (BZW).

  Robert Fleming has added to an apparent victory over its rival by placing 40 million warrants - against the 30 million planned by BZW - because of high demand.

  Mr John Knox, manager of derivatives at Jardine Fleming, which is jointly managing the issue, said last night that Cheung Kong had been informed of the issue.

   Asked if Cheung Kong had objected, he replied: ''I don't think so.''   The 18-month call warrants will be issued at $3.60 and will have an exercise price of $20.50, slightly below yesterday's Cheung Kong closing price of $20.60.

  This compares with the 18-month call warrants aborted by BZW on Friday, priced at $3.55 and with a strike price of $20.20, the same as that day's closing price.

   BZW said the issue had to be cancelled because it discovered a conflict of interest.

  Mr Knox said the Fleming warrant was not simply a copy of BZW's.

  ''We have been looking at the stock for a long time,'' he said. ''It's a stock we like and there's been strong international demand.''   The underlying securities will be held by Robert Fleming in London, and the warrants will be traded in Hongkong.

  The dearth of covered warrant issues since the sharp fall in share prices in November means the issue is one of the first under the practice note issued by the exchange last year.

  Mr Knox said the practice note had made the issue more difficult, particularly with the renewed emphasis that the warrants have at least 100 holders.

  The success of the issue appears likely to end the speculation that BZW's warrant was scrapped after resistance from Cheung Kong chairman Li Ka-shing.

  Past warrant issues by finance houses have drawn fire from companies who say such warrants issued on their shares restrict their ability to raise cash through rights issues.

  Like BZW's, the warrant appears more competitively priced than many of last summer's issues, but the real value to the investor is affected by the shorter life span - 18 months instead of two years.

  Robert Fleming issued the only other major equity warrant this year, a $334.8 million issue on HSBC Holdings.

  In addition, this year both Robert Fleming and PaineWebber of the United States have issued put and call warrants on the Hang Seng index.



Robert Fleming issues Cheung Kong warrants