COSCO said in a stock market announcement that it would divest 15.1% of the total shares to various parties in order to keep the percentage of publicly floated shares above the regulatory limit of 25%.
The shares, to be sold at the same HKD78.67 ($10.02) offer price being COSCO is paying, will be offered to three companies, two of which are China state-linked.
Crest Apex, a BVI-incorporated CK Hutchison investment holding company, will take up 4.99% of OOIL’s shares. CK Hutchison is the flagship arm of Hong Kong tycoon Li Ka-shing which groups together all his non-property related businesses, including port operations. Li has recently handed over chairmanship of the company to his son, Richard Li, amid speculation whether the new leadership will take the company in a more global direction and away from its traditional home markets in Hong Kong and mainland China.
Rongshi International will take up a 2.38% stake. The company is a Hong Kong-registered investment holding company which in turn, is a unit of State Development & Investment Corp (SDIC), a China state-owned investment holding firm under the administration of the State Council.
Meanwhile the biggest stake of 7.73% has been left for PSD Investco, a Cayman Islands-registered investment holding company which is a unit of the Silk Road Fund. The fund mainly provides investment and financing support for trade and economic cooperation and connectivity under the framework of the Belt and Road Initiative (BRI).
Explaining the rationale for the move, COSCO reiterated that it intended to maintain the listing of OOIL shares, but added that there was a possibility that the percentage of publicly held shares could drop below 25% upon closing of its offer depending on the level of acceptances. “In that case, the Joint Offerors intend to take appropriate steps to restore the public float in compliance with the Listing Rules,” COSCO said.
The agreement to divest the appropriate amount of shares before the close of offer “can avoid the uncertain process for the sale of OOIL Shares after close of the Offer, mitigate the uncertainty whether the public float of OOIL can be maintained, and minimize the risk of prolonged suspension of trading of OOIL Shares and delisting from the Stock Exchange in the event the public float of OOIL falls below the minimum requirement of 25% under Rule 8.08(1)(a) of the Listing Rules”, COSCO said.
The share sale to Crest Apex “demonstrates the parties’ long term commitments to deepening of future commercial ties, which is also consistent with the PRC’s “Belt and Road” initiative”, COSCO said, adding that there are synergies as CK Hutchison operates a number of ports along the BRI route.
In addition, having the support from Silk Road Fund and SDIC, both of which are experienced institutional investors, will further strengthen the shareholder base of OOIL after the completion of the offer, COSCO concluded.