Deal will enable firm to finance payment for convertible bonds Shanda Interactive Entertainment, whose share value has more than halved in the past two years, is raising as much as US$101 million from the sale of shares in mainland internet portal Sina Corp, market sources said yesterday. Shanda, Sina's largest shareholder, is selling 3.7 million secondary shares at US$26.76 to US$27.32 each, representing a discount of 2 per cent to 4 per cent to Friday's Nasdaq closing price, the sources said. After the transaction, the company will hold 6.1 million Sina shares, representing 12 per cent of the portal's issued share capital. The sale will help Shanda finance payment for its convertible bonds that will expire next year, other sources said. Shanda, which issued a 10-year convertible bond worth US$200 million in 2004, needs to sell the Sina stake to finance an option to redeem the bond in October next year. The conversion price for the bonds is US$39.70 each, compared with the US$14.93 New York closing price on Friday. The shares have fallen 66 per cent since the middle of October 2004. Shanda president Tang Jun could not be reached for comment. Shanda, the mainland's largest online game service provider with more than 1.34 million peak concurrent users, recorded a 40 per cent decline in second-quarter net profit to US$134 million from a year earlier. The company said it acquired 9.8 million shares in Sina in the secondary market in February 2005 for US$230 million at US$22.97 to US$30 each. The purchase represented 19.5 per cent of Sina's issued share capital and made Shanda the single largest shareholder. The company held its stake at 19.5 per cent after Sina's founding shareholders prevented it from appointing a director to the board. Sina shares gained 4.5 per cent on Friday after third-quarter net profit rose 18 per cent to US$10.7 million.