Morgan Stanley and Credit Suisse tried to sell up to half of their stakes in gas distributor China Resources Gas Group after the market closed yesterday, to take profit after the stock reached a 52-week high, market sources said. The two banks were jointly engaged in a share sale to offer institutional investors 100 million CR Gas shares at HK$3.60 to HK$3.80 each, representing a discount of up to 19.3 per cent to the firm's HK$4.46 close yesterday, according to a sales memo sent to fund managers. The transaction has a greenshoe option allowing them to sell an additional 30 million shares if demand warrants. 'The deal should draw overwhelming responses from institutional investors given the huge discount. They'd be able to attract enough demand to sell down their entire stake with a discount like that,' said a fund manager who was invited to join the share sale. After the stake disposal, without exercising the greenshoe option, the two banks will own a combined 166 million CR Gas shares in their portfolios, translating into a 11.7 per cent stake in the company. The two banks were engaged in a rights issue for the firm late last year. CR Gas, formerly China Resources Logic, has transformed itself into a gas distribution unit of state-owned China Resources Holdings. It raised HK$3.87 billion by selling four new shares for one ordinary share at HK$3.42 each in the rights issue in November last year. The offering drew weak response from shareholders, with only 68.85 per cent subscription and the two banks paid HK$909 million for a combined 266 million shares that were not subscribed for in the rights issue. The two banks could reap as much as HK$49.4 million in profit from the placement if the shares are priced at the top end with the full exercise of the greenshoe option. CR Gas has been active in debt and equity markets over the past six months since it transformed itself from a semiconductor maker into a gas company. It signed a HK$800 million two-year loan facility with lenders last month to strengthen its capital reserves and because of the low interest rate environment. The facility will be mainly used for capital expenditure and acquisition of city gas distribution projects.