Speculation reported on 4 Nov 2008 regarding a corporate block trade was confirmed today.

On 3 Nov 2008, Electric Power Corporation of Sichuan Province (EPCSP) and Meishan Asset Management Co., Ltd. (MAM), previously the company's second- and third-largest shareholders, agreed to terminate an equity transfer scheme.

On the face of it, EPCSP has abandoned its plan to purchase 20.37 mln shares of the company. However, on the day the agreement was terminated, MAM transferred its 16.423 mln unlocked shares of the company to EPCSP via the block trading system of the Shanghai Stock Exchange at a price of RMB 4.77 per share. Following this transaction, EPCSP now holds a total of 49.1416 mln shares in the company, thus becoming the company's largest shareholder.

In fact, EPCSP has coveted control of the company for two years. In August 2006, EPCSP had acquired a combined 14.56% stake in the company at RMB 2.45 per share from Shenzhen Haitong Investment Development Co., Ltd. and Sichuan Hanpai Industrial Co., Ltd., thus becoming at that time the company's second-largest shareholder. Further, on 18 Aug 2006, EPCSP had initiated the purchase of MAM's 20.37 mln state-owned shares of the company, but the plan hit a roadblock in failing to obtain the required regulatory approval.

Subsequent to the unlocking of the aforementioned 16.324 mln shares, EPCSP succeeded in purchasing the shares via block trade. The transaction was concluded at the prevailing market price of RMB 4.77 per share, nearly double the previously-agreed transfer price. Nevertheless, the acquisition is indeed a wise move in that it not only circumvents routine procedures, but also shortens the acquisition timeline.


Source: Shanghai Securities News

Date: 5 Nov 2008

CN01/VW/SW/MM