UPDATE: Taiwan Regulator Says Nan Shan Application Omitted
Specifics
(Adds government official's comment on China Strategic and Chinatrust's
agreement.)
By Jessie Ho and Perris Lee Choon Siong
Of DOW JONES NEWSWIRES
TAIPEI -(Dow Jones)- Taiwan's Investment Commission said Thursday it turned
down an application by the China Strategic Holdings Ltd.-led (0235.HK)
consortium to acquire Nan Shan Life Insurance Co. because it didn't provide
specifics on the consortium's funding sources or investors.
American International Group Inc. (AIG) agreed last month to sell its Taiwan
insurance unit, Nan Shan Life, to the consortium, comprising Hong Kong-based
China Strategic Holdings and Primus Financial Holdings Ltd., for US$2.15
billion.
But the commission turned down the consortium's application on Nov. 13, a day
after it was submitted, and asked for more information, including a statement
from AIG about its intention to sell Nan Shan Life, the commission said in a
report to lawmakers.
It also said China Strategic must explain its agreement with Chinatrust
Financial Holding Co. (2891.TW) to sell a 30% stake in Nan Shan Life to the
consumer-banking giant in exchange for a 9.95% stake in Chinatrust. China
Strategic announced that deal only this month, weeks after winning the bid for
Nan Shan Life.
"I do think they need to be more consistent," Financial Supervisory Commission
Chairman Sean Chen told lawmakers in reference to the China Strategic-Chinatrust
agreement, which critics say runs contrary to the consortium's long-term
commitment to Nan Shan Life's interests.
Chinatrust has said it intends to increase its ownership of Nan Shan Life to
more than 50% within three years by acquiring further stakes from China
Strategic. In turn, China Strategic plans to raise its stake in Chinatrust.
"This is a serious issue...for (Chinatrust's) board members and shareholders
to consider carefully," Chen said.
Chen also asked Chinatrust to hold a shareholders meeting to consider the
company's plan to issue as many as 2.5 billion new shares through a private
placement. The regulator rejected an application for the private placement Nov.
20 because of incomplete information.
Another concern in Taiwan is whether the China Strategic consortium is backed
by Chinese money. Taiwan still doesn't allow mainland Chinese investment in the
island's financial institutions. Taiwan law treats foreign companies as Chinese-
owned if Chinese investors have at least a 30% stake in them.
Chen said the commission has also asked Hong Kong's securities regulator to
provide information about China Strategic and Primus's shareholders.
Taiwan's lawmakers suggested the commission apply strict standards in its
review of China Strategic's application to buy Nan Shan Life to safeguard the
interests the insurer's customers and employees.
-By Jessie Ho and Perris Lee Choon Siong, Dow Jones Newswires; 88622 502-2557;
jessie.ho@dowjones.com
(END) Dow Jones Newswires
11-26-090311ET
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