Shanshui Bonds Rise to Two-Month High on Shareholder Deposit

  • Two shareholders put in $700 million each as cash confirmation
  • Deposit fuels speculation offer may be getting closer

Bonds of China Shanshui Cement Group Ltd., the company at the center of the nation’s latest corporate ownership tussle, rose to a two-month high on speculation shareholders may be nearing an offer.

The firm’s $500 million of 2020 notes rose 0.78 cents Monday to 94 cents as of 4:08 p.m. in Hong Kong, after plunging as low as 80.3 in July amid the squabble. China National Building Material Co. and Taiwan’s Asia Cement Corp., which combined hold 37.6 percent in Shanshui and are considering a general offer, each put in $700 million at Hong Kong’s Securities and Futures Commission on Aug. 11 as cash confirmation for the possible offer as required by regulations, according to Doris Wu, chief financial officer at Asia Cement.

Hong Kong-listed Shanshui has been mired in a shareholders’ fight for control since April amid President Xi Jinping’s call to cull weaker firms in industries grappling with overcapacity. Its largest shareholder Tianrui International Holding Co. has been trying to change Shanshui’s board. According to the takeovers code under the SFC in Hong Kong, an offer announcement should include confirmation by the financial adviser that the acquirer has sufficient resources to satisfy full acceptance of the offer.

“The deposit could also fund the repurchase of Shanshui’s notes,” said Ross Lee, a credit analyst at Bank of China Hong Kong Ltd.

Investors have also speculated that a bigger shareholding by state-owned CNBM could mean higher certainty of repayment of the bonds.

Henry Li, chief financial officer of Shanshui, confirmed the deposit, adding Shanshui also got the information from Asia Cement. An operator at CNBM wouldn’t connect to its investor relations department.

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