Chinatrust Financial to raise US$1.97bln via rights issue

The company mulls selling 3.35bln common shares to increase its working capital and strengthen its financial structure.

A board meeting of Chinatrust Financial Holding Co. on Friday approved a proposal to raise NT$60 billion (US$1.97 billion) through a rights issue.

Chinatrust Financial said it is planning to sell 3.35 billion common shares at NT$18 (US$0.59) each to increase its working capital and strengthen its financial structure for long term development.

The company will reserve 10 percent of the rights issue for its employees and another 10 percent for the public, while the company's shareholders will acquire the remaining 80 percent proportionally based on the stakes they own in the company.

Chinatrust Financial did not disclose any other details about the use of the proceeds from the rights issue, but market observers said the company will use the funds to bid for Nan Shan Life Insurance Co.

Nan Shan Life, a Taiwan-based subsidiary owned by American International Group (AIG), will be up for sale in a second round of bidding after the Taiwan government in August rejected AIG's proposed sale of the unit to a Hong Kong financial consortium.

The Taiwanese authorities cited concerns over the Hong Kong consortium's long term commitment to run Nan Shan Life and the bidder's long term financial capacity.

View the full story in Focus Taiwan.