Do u understand this ? New shares are issued at a discount of >80% . Not vested ( luckily ! )
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HK-listed Beijing Enterprises Water buys asset for 1.37 bln hkd; stock plunges
HONG KONG (XFN-ASIA) - Beijing Enterprises Water Group Ltd, a mainland-based water processor, said it will acquire 88.43 pct of Gainstar Ltd for a total consideration of 1.37 bln hkd.
The company was formerly known as Shang Hua Holdings Ltd.
Gainstar specializes in waste water treatment in China.
At the end of 2007, the net asset value of Gainstar was 78 hkd. Its net profits for 2007 was 5.2 mln hkd.
Beijing Enterprises Water will pay 542 mln hkd of the consideration via the issue of 787 mln new shares at 0.69 hkd each, a discount of 81.1 pct to the last closing price of 3.65 hkd.
The balance of 828 mln hkd will be paid through the issue of 2-year convertible bonds. The bonds will have a conversion price of 0.69 hkd per Beijing Enterprises Water share.
After the deal, controlling shareholder Beijing Enterprises Holdings Ltd's stake in Beijing Enterprises Water will decline to 59.3 pct from 74.8 pct.
Assuming full conversion, Beijing Enterprises Water needs to issue 1.2 bln new shares, and Beijing Enterprises Holdings' stake in the company will decline further to 43.7 pct.
At 11.26 am, Beijing Enterprises Water shares plunged 1.20 hkd or 32.88 pct to 2.45 while shares of Beijing Enterprises Holdings were up 0.70 hkd or 2.61 pct at 27.55.