Hutchison Whampoa's takeover of troubled Vanda Systems & Communications drove the small Internet service provider's shares up as much as 13.72 per cent yesterday.
Vanda shares ended 7.84 per cent higher at 55 cents after Hutchison and partner DBS Private Equity agreed to convert their $334 million convertible bonds in Vanda, making them majority shareholders in the money-losing company.
'The fundamentals of Vanda are quite weak,' said KGI Asia director Ben Kwong Man-bun. 'But hopes are high that Hutchison will take an active role in turning around the company.'
Hutchison paid $197.97 million for the convertible bonds in February 2000, agreeing to convert them into Vanda shares at $3.175.
In April last year, DBS Private Equity paid $136.5 million for its bonds, which had a conversion price of 85 cents.
However, on Wednesday, Vanda agreed to lower the conversion price to 30 cents. As a result of the conversion, Hutchison took a 43 per cent stake in Vanda, while DBS assumed 29.6 per cent.
The stake of the previous majority shareholder, Lam Hon Nam, was diluted to 8.5 per cent from 30.8 per cent.
