Bonds speed Jardine Matheson buyback

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The Independent Online

Jardine Matheson, the Hong Kong conglomerate attempting to pacify angry shareholders, has raised over half of the $1bn it has promised to use buying back shares through an innovative bond issue.

Jardine Matheson, the Hong Kong conglomerate attempting to pacify angry shareholders, has raised over half of the $1bn it has promised to use buying back shares through an innovative bond issue.

Jardines has issued bonds worth $550m, which are convertible into shares in Chase Manhattan, the US bank. The Hong Kong group received the shares when Chase bought Robert Fleming, the London merchant bank where Jardine had a stake worth $960m, earlier this year.

The bonds can convert into Chase shares at any time in the next seven years at a price of $63.16 a share. On Friday Chase shares closed at $52.44.

The money will go a long way to covering the $1bn cost of the share buyback that Jardine announced on Thursday.

The move is an attempt to mollify angry shareholders who have put pressure on Jardine's management over its poor performance and the complex share structure of the group.

Jardine, one of the oldest and most revered "hongs" - or trading houses - in Hong Kong, has a Byzantine structure in which it holds stakes in various companies operating in the former British colony. The most significant is the cross-holding between Jardine Matheson and Jardine Strategic. The former has 60 per cent of the latter, and the latter has 38 per cent of the former.

Californian investment group, Brandes Investment Partners, has been the main rebel. With 8 per cent of Jardine, it attempted to unravel the cross-holdings, putting a motion at Jardine's AGM in June.

That motion was seen off, but Brandes is threatening to take legal action if does not see any movement from Jardine within three months. It is supported by Marathon Asset Management, a London firm.

Jardine Matheson has said it will buy back up to 165 million shares, or 12.3 per cent of the company, at between $4.80 and $5.50 a share. Chief executive, Percy Weatheral, says this will enhance shareholder value.

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