CHINA Metallurgical Import and Export Corp has become the latest mainland company to seek a back-door listing on the stock exchange, paying $140 million for a 39 per cent stake in Chee Shing Holdings. The Beijing-based state-owned company bought 116.5 million shares at $1.20 each from Leung Chee-hon and his family, Chee Shing's largest shareholder. Mr Leung is also the chairman of Chee Shing. The price represents a discount of 54 per cent to the share's close of $2.60 on the stock exchange last Friday. Talk of an impending back-door listing had pushed the construction group's share price from $1.31 to its current high. The mainland company is also making a general offer to minority shareholders of Chee Shing at the same offer price. A source close to the mainland firm said it was not a shell acquisition as there were no plans for any assets injections. ''All the existing business of Chee Shing will be retained while new investment opportunities will be sought in China with the synergy from the deal,'' the source said. Apart from its trading business, China Metallurgical operates a significant number of steel mills on the mainland, employing more than 240,000 workers. Chee Shing, which specialises in foundation piling, building works, property investment and development, was listed in March 1991. The offer is being made through Golik Metal Industrial Co, which is 51 per cent owned by China Metallurgic (Hongkong) Co, a wholly owned offshoot of the Beijing group. Golik is also owned nine per cent by Bofield Holdings and 40 per cent by World Producer and Pang Tak-chung. China Metallurgic bought the 51 per cent interest in May, in what was seen as a preparatory move for a Hongkong acquisition. Incorporated in Hongkong in 1977, Golik manufactures and distributes drawn steel rods, wire mesh and other steel products. Bofield is an investment holding company controlled by Francis N.C. Cheung and Henry Lai, the founders and former directors of Tung Wing Steel Holdings, whose ownership was sold to Shougang Holdings, another mainland conglomerate, a few months ago. World Producer, also an investment holding company, is run by Mr Pang, who is a founder and director of Golik. Golik said yesterday the acquisition was aimed at investing in Chee Shing's existing construction-related business. It said it would ask the directors of Chee Shing to stay on with a view to maintain the present management. On the pricing of the offer, it said that based on Chee Shing's audited financial statements as at March 31 last year, its net asset value was about $126 million. The offer values the company at about $360 million, representing a premium of 187 per cent to its latest net asset value. Sun Hung Kai International has been appointed financial adviser to Golik, while Internationale Nederlanden Capital Markets (Hongkong) will advise minority shareholders. Chee Shing's performance since its listing has been severely affected by the downturn in Hongkong's construction industry. For the previous year to March 31, its audited consolidated profit attributable to shareholders amounted to $44 million. However, for the six months to September 30 last year, its profit was only about $9 million.
