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Cosco (HK) Property Development's financial adviser, Peregrine Capital, is in discussions with the Securities and Futures Commission (SFC) over Shun Shing Holdings' share suspension on Wednesday.

 The SFC says Cosco failed to obtain its consent before injecting capital into Shun Shing within six months of acquiring the company.

 Cosco Pacific vice-chairman Zhang Dachun said Cosco's understanding was that existing rules applied only to asset injections, while the SFC claimed the rules applied to capital as well.

 The differences had arisen due to different interpretations of Rule 31.3 of the Hong Kong Code on Takeovers and Mergers, he said.

 Kelvin Wong Tin-yau, who is a director of both Shun Shing and Cosco Pacific, said the outcome of the discussions was not yet known.

 Shun Shing recently launched a share placement to raise $623.3 million to buy property assets from holding company Cosco (HK) Property Development.

 Cosco was to place 52.42 million Shun Shing shares - 7.8 per cent of the company - at $4.68 a share, and then was to subscribe for 134.4 million new shares at the same price.

 After the deal, Cosco's stake, currently at 61 per cent, was to remain about the same level.

 Asked about the company's four newly acquired ports in China, Mr Zhang said that in the first quarter, Yantai port had handled 159,000 teu (20-foot equivalent units), a 125 per cent rise over the first quarter of 1996.

 He said that over the same period, Qingdao port handled 100,000 teu, representing a 44.6 per cent increase, while Shanghai port handled 500,000 teu, a 19.6 per cent increase.

 Zhangjiagang port reported handling 35,000 teu, a 10 per cent growth over the same period.

 The recent lifting of the ban on direct shipping between China and Taiwan did not have much impact on Cosco's operations, Mr Zhang said.



SFC in talks on suspension of Shun Shing