CHINA First Pencil is launching an eight-for-10 rights issue of B shares to raise 65.98 million yuan (about HK$88.4 million at the official rate). It will issue 20 million B rights shares at a price of 37.92 US cents each - equivalent to 3.23 yuan, according to the exchange rate used by the company. The price represents a 27.1 per cent discount to yesterday's closing price of 52 US cents. As part of the deal, the company is also launching a two-for-10 bonus share issue. Five million bonus B shares will be issued. The bonus issue is conditional upon the completion of the rights issue. Fractional entitlements to B rights shares will not be allotted to shareholders. They will be aggregated and will be available to shareholders who apply for excess B rights shares. The B share rights issue will not be registered under the United States Securities Act of 1993, and will therefore not be available to Americans except by way of a private placement. Yamaichi International (HK), Shanghai Hai Tong Securities, Bookook Securities, Crosby Securities, PBI Securities Hong Kong and Worldsec International have agreed to procure subscribers for, or to subscribe themselves for, any B rights shares not taken upor applied for in the rights share issue. The rights issue and bonus issue are conditional on the obtaining of all necessary mainland regulatory approvals, and the listing of, and permission having been granted to deal in, the B rights shares and the bonus shares on the Shanghai Securities Exchange on a fully-paid basis. Application has been made to the exchange for the listing of and permission to deal in the B rights shares and the bonus shares in fully paid form. There will be no dealing in the nil-paid B rights shares. The latest time and date for acceptance and payment for the B rights shares will be 4 pm on January 28, 1994. B shares with a combined nominal value of 1,000 yuan constitute one trading unit. For the year to December 31, 1992, the company is also paying shareholders a final dividend of 0.08 yuan per A share. The news follows the group's announcement that it is launching an eight-for-10 rights issue in A shares to raise about 26.6 million yuan. A total of 8.06 million A rights shares will be issued at 3.3 yuan each, representing an 80 per cent discount to yesterday's close. of 16.47 yuan. There is also a two-for-10 bonus A share issue, with a total allotment of 7.8 million bonus A shares. Shanghai Hai Tong Securities Co has agreed to procure subscribers for, or to subscribe itself for, any A rights shares not taken up in the A share rights issue. Dealings in the A rights shares, B shares and the bonus shares is expected to start by February 7. Trading in the A and B shares is suspended today.