Citic Ka Wah's HK$4.2 billion buy-out of Hongkong Chinese Bank will result in a special cash dividend payout of at least HK$1.35 billion, or HK$1 per share.
The payout will provide some compensation to minority shareholders in the bank's parent company - HKCB Bank Holding - for the sale of their bank.
Terms accepted by a simple majority vote of major shareholders China Resources Enterprise (CRE) and Lippo China Resources will see listed HKCB Bank Holding part with HKCB, its dominant asset.
The consideration will be settled with a HK$3.36 billion cash payment and HK$840 million in certificates of deposit. Citic will use internal resources including a recent US$300 million subordinated debt issue to pay for the transaction, and will also make a HK$726 million rights issue to bolster its capital base.
Hours after the deal was announced yesterday, it emerged that CRE would not remain invested in the cash shell left by the deal. Lippo - the listed vehicle of the Indonesian Riady family - said it would buy CRE's effective 35.23 per cent stake in the holding company for HK$1.8 billion.
The disposal will result in a loss to CRE of HK$320 million and will leave Lippo with a 64.6 per cent stake in the rump of HKCB Bank Holding.