Minority shareholders rejected the share reform proposals of two Sinopec Corp units for a second time yesterday, with the firms now saying they don't have any immediate plan for a third attempt.
Sinopec Shanghai Petrochemical Co revived a plan last December by offering small shareholders 3.2 state-owned A shares for every 10 held under a nationwide program to float nontradable state shares on the market.
The proposal is the same as the one in October 2006, which had been voted down by minority holders. Sinopec Shanghai is 55.56 percent owned by Sinopec, as China Petroleum & Chemical Corp is known.
Sinopec Shanghai is among the last batch of firms to complete the share reform program which was launched in 2005. Typically, minority shareholders are given bonus stocks as disposing the nontradable shares could dilute share value.
The firm needs approval from two-thirds of the tradable shareholders. According to yesterday's results, only 26.83 percent of them agreed.
"Minority holders rejected the offer in 2006 because their hopes that Sinopec will privatize Sinopec Shanghai were dashed," said one analyst. "Now they are even more unwilling to say yes as Sinopec left the compensation unchanged after a one-year wait."
Investors prefer a buyout as this can lead to better returns than the bonus share compensation. Sinopec had privatized a group of listed units over the past years.
Minority shareholders in Sinopec Yizheng Chemical Fiber Co also vetoed for the second time the firm's proposal yesterday.
Sinopec reaffirmed yesterday it has no plan to buy out Sinopec Shanghai and Sinopec Yizheng and insisted the offers are higher than market average. The two units said their operations won't be affected.
Sinopec board secretary Chen Ge said yesterday in Shanghai he regretted the result. Sinopec Chairman Rong Guangdao has said the regulator may impose further curbs on its stock trading if the proposal failed again.
Sinopec Shanghai is subject to a five-percent daily trading limit, half of the regular cap, after its first attempt failed in 2006.
(Shanghai Daily January 16, 2008)
