China Strategic Holdings Ltd (中策集團) will remain committed to the local market even if it eventually releases its controlling stake in Nan Shan Life Insurance Co (南山人壽) to Chinatrust Financial Holding Co (中信金控), an executive said yesterday.
“None of our money invested in Taiwan will leave the local market,” Raymond Or (柯清輝), vice chairman and chief executive officer of Hong Kong-based China Strategic, told a media briefing in Taipei.
“If Chinatrust Financial buys more of our shares in Nan Shan [as agreed in a memorandum of understanding (MOU) signed last week], we will use the proceeds to increase our stake in Chinatrust Financial,” he said.
PHOTO: REUTERS
China Strategic formed a consortium with its 80 percent-owned Primus Financial Holdings Ltd to acquire a 97.57 percent stake in Taipei-based Nan Shan from financially troubled American International Group Inc (AIG) for US$2.15 billion on Oct. 13.
The acquisition deal, which is still pending regulatory approval in both Taiwan and the US, is expected to expire in nine months. China Strategic will negotiate an extension with AIG if it fails to receive regulatory approval before next July, Or said.
On Nov. 17, China Strategic, formerly a battery maker, announced unexpectedly that it would relinquish 30 percent of its Nan Shan shares to Chinatrust Financial for US$660 million.
China Strategic said it would use the proceeds to buy 1.172 billion new common shares of Chinatrust Financial, which the Taipei-based financial services provider would issue at NT$17.74 per share via a private placement.
China Strategic would then hold a 9.95 percent stake in Chinatrust Financial, the companies said at the time.
Or, 60, formerly vice chairman of Hang Sheng Bank Ltd (恆生銀行) in Hong Kong, said yesterday that even after the share transfer — expected within three years — China Strategic would remain the biggest shareholder in Nan Shan, with a 54 percent stake, followed by Chinatrust Financial at 30 percent and Primus Financial at 13.5 percent.
The Financial Supervisory Commission (FSC) last week criticized China Strategic for “lacking consistency” in handling the acquisition. Further doubt was cast on the deal when the FSC rejected a private placement application by Chinatrust Financial, also last week.
Chinatrust Financial said on Tuesday that the application, submitted in early September, was rejected on Friday on the grounds that “details to the fundraising scheme” were “missing.”
A company executive yesterday declined to speculate on whether the rejection had to do with the anticipated participation of China Strategic in its planned private placement.
FSC Banking Bureau head Chang Ming-daw (張明道) told the Chinese-language United Evening News that the application was rejected because Chinatrust Financial failed to clarify how it would use the NT$44.35 billion (US$1.37 billion) in capital raised through the private placement.
He declined to say whether the FSC would approve the application if part of the money is used to inject funds into Nan Shan together with China Strategic.
Despite the increasing obstacles to regulatory approval, Or expressed confidence that the transaction could be closed by introducing a local partner.
“We believe our partnership with Chinatrust Financial will be a win-win-win deal that puts Nan Shan’s interests first,” he said.
He said the company believed the public, the legislature and Nan Shan employees would find it easier to accept China Strategic as the new owner with a local partner.
“The biggest challenge for us now is to win acceptance” in Taiwan, Or said.
He said none of the company’s capital — which comes from 45 investors including three corporate investors — is China-funded.
He also said the company’s plan to borrow US$700 million from First Commercial Bank (第一銀行) and Taiwan Cooperative Bank (合作金庫銀行) to fund the acquisition had not run into any obstacles.
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