HONG KONG -- Citic Pacific Ltd. disclosed larger losses than estimated from its foreign-exchange contracts due to the weakness of the Australian dollar.
Citic Pacific said its realized and potential losses from unauthorized foreign-exchange contracts had risen to a total of 18.6 billion Hong Kong dollars (US$2.4 billion) as of Nov. 26, up from the HK$16.8 billion it reported last month.
The Hong Kong-listed conglomerate also said it will pay HK$9.1 billion to its parent, the Chinese state-controlled Citic Group, for taking liabilities arising from certain foreign-exchange contracts with estimated mark-to-market losses of HK$11.3 billion.
Last month, Citic Pacific agreed to a deal with Citic Group, giving it access to US$1.5 billion in loans and allowing it to unload a significant portion of the burdensome Australian dollar contracts. Under the deal, Citic Pacific agreed to issue a convertible bond to Citic Group, giving its parent a 57.6% stake in the company, up from the current 29.4%.
Independent financial adviser Anglo Chinese Corporate Finance has recommended that shareholders vote in favor of the proposal at a Dec. 19 meeting. The deal is in the best interests of both Citic Pacific and its independent shareholders, the adviser said.
Citic Pacific fell 7.3% to HK$5.59 in Hong Kong trading. Trading in Citic Pacific's shares was suspended Tuesday pending an announcement on the convertible-bond issue.
The company's shares have fallen 62% since Oct. 20, when Citic Pacific disclosed that it faced losses of more than HK$15 billion on leveraged positions on the Australian dollar.
Citic Pacific made bets on the Australian dollar that went bad when the U.S. dollar rallied.
Hong Kong's Securities and Futures Commission started an investigation into the company in October, but Citic Pacific said it currently had no further comment to make on the probe.
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