On 12 June, the board of directors of China Minsheng Banking Corp. Ltd (600837) agreed to re-auction the 269 million shares of Haitong Securities Company Limited (600837) prior to 30 June. The final price of the auction was RMB 3.14 bln, which was RMB 1.9 bln lower than the floor price of RMB 5.04 bln during the previous auction.

China Minsheng Bank cancelled the auction after it failed to attract potential bidders prior to the deadline. A new auction will still set the previous trading day prior the auction announcement (14 May) as its benchmark day for defining the asking price. The reserve price would be the average trading price of 30 trading days prior the benchmark day (including 14 May). Previously, the discount was set at 80%. Based on this calculation model, average price of Haitong Securities in 30 trading days prior to 14 May was RMB 46.83 per share. On 22 May, Haitong Securities exercised its profit distribution scheme, which was to give out 3 bonus shares and 7 shares as stock dividends from surplus reserve, plus RMB 1 cash dividend for every ten shares. The average price, after ex-dividend, is RMB 23.36, and its 50% is RMB 11.68. This floor price is 44% of its closing price on 12 Jun, which was RMB 26.80.

Apart from price, long lock-up period of these shares was the other factor which frustrated potential buyers. It was required that the winner of this bid could not transfer the shares of Haitong Securities within 48 months. On this occasion, however, explanation for the lock-up period might be changed slightly, which could be 48 months following Minsheng Bank's receipt of the shares on 14 Nov 2005. Consequently, the buyer could have the shares freed on 14 Nov 2009, only one and half a years following the share transfer.

Source: Shanghai Securities News

Date: 13 Jun 2008

CN01/DM/BT/WH