CONTINENTAL Mariner Investments is proposing a $1.03 billion rights issue to fund the takeover of Lolliman Holdings which is being valued at $788.8 million. The one-for-one rights issue is priced at $11.8 per share, representing a discount of 34 per cent to the closing price of $18 per share last Wednesday. Continental Mariner's largest shareholder, Source Holdings, which holds a 47.6 per cent stake, has agreed to subscribe for the new shares. Source and Peregrine have agreed to jointly underwrite the balance of the rights issue which amounts to 46.1 million rights shares. Source is now 55 per cent per cent owned by Poly Technologies, 35 per cent by CITIC Development and 10 per cent by Steven Kwan. More than half of the fund being raised from the rights issue will be used for the takeover of Lolliman. Net proceeds of the rights issue is expected to be about $1.01 billion. About $591.6 million will be used to buy up to 75 per cent interest in Lolliman, while the balance will be used as working capital. Under the agreement, Continental Mariner will buy a 60 per cent stake in Lolliman from Emperor International and Emperor (China Concept) Investments for $472.1 million. The mainland-backed concern is obliged to make a general cash offer at 65 cents each for the remaining Lolliman shares. The offer price represents a discount of about 55.8 per cent to the closing price of $1.47 on Wednesday last week. Continental Mariner said the new investment will help Continental Mariner diversify its asset base and earnings sources, the company said. Continental Mariner has emerged as a major China play following its backdoor acquisition by Poly Technologies Inc, a breakaway Beijing-based CITIC offshoot. Following the takeover, Lolliman's major assets will be a portfolio of commercial properties and a 45 per cent interest in Best Fulfil Inc, a manufacture of sportswear. Lolliman will continue its existing businesses, and Continental Mariner has no intention to inject any of its material assets into Lolliman. All the present directors of Lolliman will resign from the board, and representatives nominated by Continental Mariner will be appointed. Meanwhile, as part of the arrangements, Lolliman is to sell all its shares and warrants interests in Hongkong Daily News for $200 million to Emperor China. The shares represent a 33.2 per cent interest in Hongkong Daily News. Emperor China intends to hold the interest in Hongkong Daily News as a long term investment. The transaction is not expected to result in any changes to the board, management or business operation of the company. In a separate deal, Emperor has agreed to sell to an independent party, Happy World International, the balance of the Lolliman shares it is holding. The 120 million shares, re presenting 9.9 per cent of Lo lliman's issued share capital , will be sold for 65 cents pe r share. cated that it will not accep t the offer by Continental Ma riner. Apart from the present ac quisition, Continental Mari ner is also planning to b uy a number of industrial inv estments on the mainland.