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Shenzhen Development Bank submits share reform plan

(Xinhua)
Updated: 2007-05-24 10:41

The long-awaited share reform plan of Shenzhen Development Bank (SDB), the mainland's first foreign-controlled listed lender, was finally filed to the Shenzhen Stock Exchange yesterday.

The bank's Board of Directors said in a statement issued last night that it had decided to increase the number of call warrants offered to all shareholders and lower the exercise price in response to the main requests of the tradable shareholders.

The statement added that it was the result of "active discussions" between major non-tradable shareholders and tradable shareholders since the new share reform plan was proposed on May 16.

The Board of Directors, without excessive dilution of ROAE and EPS, approved to allow all shareholders to purchase 1.5 new shares for each 10 shares owned after the stock dividend, 50 percent more new share compared with the prior plan.

The exercise price is further lowered from 19.89 yuan (US$2.6) to 19 yuan.

The bank plans to issue one warrant at a lifetime of six months per 10 shares and 0.5 warrant at a lifetime of 12 months per 10 shares. The latter was improved from the previous nine months to answer some tradable shareholders for a longer duration.

The statement said the call warrant proposal would be presented for approval by the special and relevant shareholders' meeting, subject to the approval of China Securities Regulatory Commission, immediately after shareholders' approval of share reform.

Meanwhile, the bank will pay out 12.68 million yuan in cash dividend to tradable shareholders for the relevant tax payment for tradable shareholders from stock dividends while the official consideration of stock dividend remains the same as in the prior plan announced last week.

The tradable shareholders will receive 1 share for each 10 shares and the shareholdings of the non-tradable shareholders will be diluted by almost 7 percent. Tradable shareholders will receive shares worth more than 1 billion yuan from non-tradable shareholders as consideration for share reform.

"SDB believes that the revisions have addressed the main requests of tradable shareholders and provided them with attractive benefits after the share reform," said the statement.

"As SDB is making progresses in business growth and earning capability, the completion of share reform is very significant and helpful for SDB to develop the business with sound capital base and funding capacity, thus providing strong results and benefits to all shareholders."

SDB stock would resume trading through May 31 and the trading will be halted on June 1 and the tradable shareholder can vote on the Internet between June 6 and June 8, or vote on site at the Relevant Shareholders' Meeting scheduled on June 8.

It has become increasingly urgent for the SDB to fulfill the share reform at a time that more than 90 percent of the listed companies on the Chinese mainland have finished or carried out State shares reform. Its first reform proposal in last July was rejected partly because some of the tradable shareholders were unhappy about the uncertain payment, which should depend on the share prices.

Some securities houses said they were optimistic about the passing of SDB's new plan because the tradable shareholders' benefits have been fully taken into consideration.

"The reform will generate 1 billion yuan consideration to the tradable shareholders, which is much higher than the market's expectation," said a UBS report shortly after the new plan was proposed last week.

While in another report by Industrial Securities, analysts said the non-tradable shareholders have made big compromise in the new plan, which have greatly improved the chance to be passed.

The medium-sized lender is approximately 72 percent owned by tradable shares held by the public while 17.9 percent is owned by Newbridge Asia, a US private equity firm and the controlling shareholder.