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SCMP Reporter

The South China Group is rumoured to be planning a hostile takeover bid for all outstanding shares in Four Seas Travel International at 20 cents each, valuing the firm at about $36 million.

 Shares in the discount air-ticket broker rose three cents or 17.6 per cent to 20 cents, with 105.08 million shares changing hands.

 Until yesterday's huge volume, there had been no turnover in the stock since December 21, when only 400 shares were traded.

 Sources said Four Seas Travel vice-chairman and managing director Leung Hoi had pledged all his holdings in the company to a European bank as collateral for a loan extended to him.

 They suggested yesterday's sudden boost in volume could have been a result of the bank dumping the shares.

 The sold shares were all bought by South China Brokerage. Brokers said the South China Group might proceed with a general offer through its indirectly-owned South China Strategic Investments or some other related entities.

 A per-share general offer price of 20 cents would represent a deep 77.5 per cent discount to Four Seas' net-asset value per share of 89 cents as of March 31 last year.

 According to the company's annual report for last fiscal year, chairman Leung Yeung Lai-ling and Leung Hoi collectively controlled 113.53 million shares or 62.99 per cent of the issued share capital through nominee company Gaware Holdings.

 Four Seas recorded an attributable loss of $6.37 million in the six months to September, compared with a $14.49 million attributable profit previously, due to Hong Kong's sluggish travel industry.

 The fate of its $31.34 million deposit with the collapsed Guangdong International Trust and Investment Corp remains uncertain.

 Four Seas was one of the hottest stocks of the red-chip fever in the first half of last year.

 Its share price climbed to an all-time high of $1.97 last January as China North Industries approached Mr Leung with a proposal to acquire part of his stake in the company.



South China buys into Four Seas at discount