Shanghai Stock Exchange wants more clarity on Cosco Shipping-OOIL dealShanghai Stock Exchange wants more clarity on Cosco Shipping-OOIL deal

On 9 July, China Cosco Shipping Corp (Cosco Shipping), parent of the Shanghai-listed Cosco Shipping Holdings, tabled a $6.3bn offer to acquire 429,950,088 OOIL shares representing 68.7% of issued share capital, with Cosco Shipping assuming 58.8% and Shanghai Port International Group (SIPG) taking the remaining 9.9% stake. The remaining 31.3% of shares will be validly tendered for acceptance by Cosco Shipping under the offer.

While Cosco Shipping mentioned that it intends to maintain the listing of OOIL shares on Hong Kong, there is a possibility that the public will hold less than 25% of the shares.

This prompted the SSE to raise a point that the less than 25% public ownership of OOIL shares “may not fulfil the listing requirements on HKSE”, requiring Cosco Shipping to provide clarifications.

With the offer for each OOIL share at a premium of approximately 55.2% over its average closing price of HKD50.69 for the 30 trading days immediately prior to 6 July 2017, the offer is deemed attractive enough to entice possibly many shareholders to accept the offer and thus dilute the public ownership to less than 25%.

Another point raised is that with Cosco Shipping mentioning that the takeover deal is subject to antitrust approval from authorities including those in the US and EU, the SSE questioned if the deal may still fall through and the impact and risk associated with a failed takeover.

The Shanghai stock exchange also asked Cosco Shipping to include comments from financial advisors and accountants on how the $6.3bn offer has been arrived.

Other clarifications raised by the stock exchange include a need to reveal the names of all external financial creditors and adjustments to their loan arrangements, if applicable, and the potential impact if the creditors demand for early repayment of their loans.