China Strategic Holdings Ltd (中策集團) yesterday denied media reports that its application to acquire Nan Shan Life Insurance Co (南山人壽) had been turned down by Taiwan’s regulatory authorities.
At the same time, two more ratings agencies expressed concerns of financial risk for Chinatrust Financial Holding Co (中信金控) regarding its intention to purchase a 30 percent stake in Nan Shan from China Strategic.
In a statement issued to the Hong Kong Stock Exchange, China Strategic said the US$2.15 billion deal it announced on Oct. 13, along with investment partner Primus Financial Holdings Ltd, to purchase a 97.57 percent stake in Nan Shan from American International Group Inc was still under way.
“Approval of the company’s application to the relevant Taiwanese regulatory authorities has not been rejected and is yet to be determined,” China Strategic said in the statement, dismissing a report by the South China Morning Post earlier yesterday that the Ministry of Economic Affairs (MOEA) had rejected its application last Friday.
“The proposed transactions remain subject to further negotiations. It remains the intention of the company to have control over Nan Shan, either directly or indirectly,” the company said.
China Strategic chief executive officer Raymond Or (柯清輝) said at a press conference in Hong Kong yesterday that the company aimed to maintain long-term control of Nan Shan and would resubmit its application to regulators shortly, both Bloomberg News and Dow Jones Newswires reported.
China Strategic’s response came amid media reports in Taiwan and Hong Kong that the Hong Kong consortium might face difficulty in obtaining Taiwanese regulators’ approval for the Nan Shan deal, mainly because of concerns on whether Chinese funds are involved.
The MOEA said yesterday it had “returned” rather than “rejected” the Hong Kong consortium’s application last week.
“We asked them to resubmit the documents,” Fan Liang-tung (范良棟), head of the Investment Commission, said by telephone yesterday.
He said the Hong Kong consortium supplied insufficient information in its application on the shareholding structure and the nationalities of the shareholders.
The company’s shareholder structure is what concerns most and the information supplied in the application was not clear enough to satisfy the commission, Fan said.
He said the commission had informed the consortium about which topics required further clarification, but said he was not sure when the consortium would resubmit.
Perhaps in a tactic to win regulatory approval, China Strategic said on Tuesday that it would sell a 30 percent stake in Nan Shan to Chinatrust Financial for US$660 million, making the Taiwanese firm a minority stakeholder. In exchange, Chinatrust Financial would sell 9.95 percent of its shares to China Strategic for NT$20.79 billion (US$644 million) via a private placement.
This new deal prompted Standard & Poor’s (S&P) Ratings Services to place its long-term and short-term counterparty credit ratings on Chinatrust Financial on CreditWatch with negative implications.
“The CreditWatch placement reflects our view that the Chinatrust Financial group may face higher business and operating risks from managing its new life insurance business in partnership with China Strategic,” credit analyst Patty Wang (王珮齡) said in an e-mailed statement.
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