HONG KONG

By Zanja Grace Aguas

Henderson Investment's Minority Shareholders Claim Victory Over Proposed Privatization

Henderson Land Devt. Co. Ltd. (HLD) failed in its bid to take 73.5-percent owned Henderson Investment Co. Ltd. (HIL) private. The bid was rejected at a court meeting held on Jan. 2, 2003, for the purpose of approving the privatization by way of a scheme of arrangement at an offer price of HK7.6 per issued HIL share ($0.97) held by minority shareholders.

HIL is a holding company with subsidiaries engaged in property development and investment, investment holding, infrastructure, department store operation, retailing and hotel business, security guard services, and information technology in Hong Kong. The company has equity interests in Hong Kong and China Gas (HKCG), Hong Kong Ferry, Miramar Hotel and Investment Ltd. (Miramar Hotel), and Henderson Cyber Ltd. (Henderson Cyber).

The proposal was made in order to effect a leaner structure and enhance HLD's operating efficiency, as both HLD and HIL are engaged in property development and investment. Parties in favor of the privatization held the view that the offer would provide minority shareholders the opportunity to liquidate their shares in favor of better investment alternatives. It was noted that HIL over the past three years has become increasingly dependent on income from associated companies particularly Hong Kong and China Gas.

Several independent shareholders however, expressed discontent over the adequacy of HLD's offer price, which represented a discount of approximately 28 percent over HIL's net tangible asset value. HIL's combined equity interests in HKCG, Hong Kong Ferry, Miramar Hotel, and Henderson Cyber is estimated at HK$8.6 ($1.1) per share. Adding the company's residual net tangible assets, the value of each HIL share is calculated to be at least HK$10.5 ($1.3).

The privatization offer was rejected after minority shareholders representing 14.4 percent of the total number of HIL shares voted disapproved the scheme. Under Hong Kong rules, it takes at least a ten-percent vote against by minority shareholders to reject a buyout offer.