CHINA Strategic Investment's (CSI) share-swap deal with IHD Holdings has been rejected by IHD minority shareholders. CSI shareholders had approved the deal but the approval of IHD minorities was a pre-condition and it has now lapsed. Under the deal, the two companies were to have taken up shareholdings in each other worth $172.5 million. CSI was to have taken up 69 million new shares in IHD at $2.50, representing about 19.8 per cent of the existing share capital. CSI chairman Oei Hong Leong was to have paid $100 million for 40 million old shares from former IHD chairman Ch'ng Poh, also at $2.50, giving him a holding of 11.5 per cent. Mr Ch'ng's wife, Kong Yuk Chu, who took over as chairman, had agreed to buy 20 million new IHD shares, also at $2.50 each. On the CSI side, the company was to place 23 million new shares, or 7.3 per cent of existing share capital, with IHD at $7.50 each, the same value as the 69 million IHD shares it is to take up in the cross deal. When the deal was announced in late February, the companies both said the deal reflected common areas of business interest. One example was CSI's consumer durables manufacturing operation in China which could benefit from the expansion of IHD's Emporium retail business. The share-swap deal announcement in February came just a week after the collapse of the planned sale of Mr Ch'ng's stake in IHD to Shougang Holdings (Hongkong). A month earlier, an attempt by CSI to take controlling stakes in Pacpo Holdings and Hongkong Building & Loan Agency (HKBLA) also fell through. This was because of objections from a group of creditors who were owed $435 million by HKBLA and objected to the change of ownership. In a statement about the latest deal, CSI company secretary Catherine Ma Wai-man said directors believed the collapse of the deal would have no material affect on CSI since under the terms of the deal it would not have received any subscription money. Trading in CSI shares, which was suspended on Thursday morning, will resume on Tuesday.
