Shares at cement maker China Resources Cement Holdings slipped 3.72 per cent yesterday to $1.81 at the prospect of a strong dilution of minority shareholders' interests as a result of a planned $800 million convertible bond. The red chip plans to issue zero-coupon bonds to its unlisted parent China Resources Holdings, allowing it to convert the bonds into 400 million new shares, which represents 110.3 per cent of the existing issued share capital or 52.4 per cent of the enlarged issued share capital. Brokers said investors were worried about the potential significant dilution impact on the stock while the investment sentiment on cement plays had been soured by macro-economic measures. 'Investors should dump the stock because the convertible bond issue is worth more than the entire company,' Fulbright Securities general manager Francis Lun Sheung-nim said, pointing to the company's market capitalisation of $656.68 million. China Resources Cement chief financial officer Robert Lau Chung-kwok said the bond issue was the most feasible fund-raising option for the company and that minority shareholders could invest in it. 'We thought about a share placement, but we feared a poor response because investment confidence on cement stocks was hurt by the mainland's anti-inflation measures,' he said. 'The bond issue is very important to our future development ... providing us sufficient capital resources to raise our production capacity to meet strong demand growth.' Minority shareholders will be able to subscribe to $200 million through a clawback offer. The conversion price of the bonds is $2 per share, or a 6.4 per cent premium to the last closing price of $1.88 on Monday, the last trading day before a suspension from Tuesday to Thursday. The bonds mature in 2010. The company will spend the proceeds acquiring a 73.5 per cent stake in a joint venture in Pingnan, Guangxi, for $151.7 million, paying off a $195 million bank loan for the joint venture, adding a production line and boosting working capital.