The parent of red chip Cosco Pacific - Cosco (Hong Kong) Group - is to launch a five-year guaranteed exchangeable bond issue to raise up to US$175 million for new acquisitions. It announced last night the issue would be arranged by Salomon Brothers International, Jardine Fleming Securities and SocGen-Crosby Securities (HK), without giving details. Market sources said if a US$25 million greenshoe option were exercised, the issue would raise US$175 million. The price was to be fixed in London, as the bonds would be listed on the Luxembourg Stock Exchange. The bonds carry a coupon rate of 0.75 to 1.25 per cent, while the redemption price will be 250 to 300 basis points over the face value, the sources said. Bond-holders can exchange the bonds into shares of Cosco Pacific upon conversion in 2003, which sources said would trim Cosco (HK)'s stake to about 51 per cent. Cosco (HK) president Zhang Dachun was unavailable for comment yesterday. It is understood the holding company plans to use the funds raised to acquire new infrastructure projects in the mainland, including ports and toll roads. Cosco (HK) has two listed arms in Hong Kong - Cosco Pacific and Cosco International. Cosco Pacific will focus on shipping and related business, including ports, while Cosco International will concentrate on property and infrastructure other than ports. Cosco (HK) will be the second red-chip holding company to issue convertible bonds if the plan proceeeds. The parent of Shanghai Industrial Holdings last month launched a US$150 million exchangeable bond.