FYI: News Headlines; Dateline China
Sat, 23 Jan 1999, 2:11am EST
China's Heilongjiang Agriculture Delays $221 Mln IPO Citing Market Fall
Heilongjiang Agriculture Delays $221 Mn IPO Citing Market Fall
Hong Kong, Jan. 23 (Bloomberg) -- Heilongjiang
Agriculture Co., a unit of China's largest crop producer,
postponed a $221 million first-time share sale, as investors
shun China on concern over its financial stability.
The company originally intended to raise as much as
HK$1.71 billion ($221 million) by selling 630 million shares,
or 35 percent of its total share capital, at between HK$2.16
and HK$2.71 a share. The sale was due to begin in Hong Kong on
Tuesday.
''It's bad timing. Few investors would want to touch
China for the moment,'' said Ambrose Chang, a fund manager at
Daiwa International Capital Management (HK) Ltd.
Heilongjiang is the first major Chinese company in more
than a year to postpone its share sale after a series of
international presentations. The last major sale to be delayed
involved Yanzhou Coal Mining Co., after financial turmoil hit
Hong Kong in October 1997.
Paul Kelly, head of syndicate at ING Barings, the global
coordinator of the share sale, attributed the delay to
deteriorated market conditions since the company began
presentations to international investors on Jan. 11. He
declined to comment on the response to those presentations.
Kelly said the sale will be postponed until ''market
conditions are more favorable''.
Hong Kong's Hang Seng China Enterprises Index, which
tracks the performance of 41 state-controlled companies
already listed in the city, fell 5 percent to a five-month low
of 292.00 yesterday. Investors were reacting to comments by
Barton Biggs, chairman and global strategist of Morgan Stanley
Dean Witter Investment Management, that Brazil's decision last
week to let its currency weaken could trigger currency
declines in other Latin American countries and Asia, including
China.
Investor Risk
The index has lost 27 percent this year, as risks
increase for investors in China. The government shut down
Guangdong International Trust and Investment Corp., the
financial arm of its richest province, in October when it
couldn't meet debt repayments of $2 billion. Since then, more
trust companies and state-owned companies have revealed
similar problems, triggering a virtual freeze of new foreign
bank lending to Chinese firms.
The price range of Heilongjiang's proposed sale
represented a proforma fully diluted price-earnings ratio of
7.1 times to 8.7 times prospective 1998 earnings of 521
million yuan ($62.8 million).
Ninety percent of the shares were expected to be sold to
international investors during presentations to investors that
began Jan. 11 in Singapore and ended in the U.S. yesterday.
The other 10 percent of the share sale was to be opened
for public subscription in Hong Kong between Jan. 26 and Jan.
29, while trading in the shares was scheduled to start in Hong
Kong on Feb. 5.
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