Investor cries foul over CIMC bid for rig firm

The US$213 million bid by China International Marine Containers (Group) for control of Singaporean oil-rig maker Yantai Raffles Shipyard has been rocked by allegations of foul play from one of the target company's independent shareholders.

In a move that could test Sino-Singaporean relations, Airtrust (Singapore), a founding shareholder of Yantai Raffles, yesterday urged the city state's financial regulator to investigate the takeover.

Airtrust, an industrial services group controlled by Singapore's Fong family, has complained that CIMC's US$1.41 a share bid undervalues Yantai Raffles and leaves its small investors 'stranded'.

In a strongly worded letter to the Securities Industry Council (SIC), Airtrust accuses CIMC, the world's largest shipping container maker, of designing a 'highly unfair' bid structure that forces small shareholders to accept a low-ball offer. The deal values Yantai Raffles at US$387 million.

The container ship maker has said Yantai Raffles' majority shareholders - comprising a company connected to itself and companies connected to Yantai Raffles executive director Brian Chang - can swap their shares in the rig maker one for one for shares in CIMC, which are trading at about HK$9.28.

But minority investors do not have the option of getting shares in CIMC, a company with growth potential. They must either accept the US$1.41 a share offer or stay invested in Yantai Raffles, a painful choice because the rig maker will become a CIMC subsidiary whose shares are not tradable.