CIC gives reference price for MS share purchase

Updated: 2007-12-22 19:06

BEIJING -- China Investment Corp. (CIC) said on Saturday the reference price for its stake in US-based Morgan Stanley was fixed to range from $48.07 to $57.684 per share.

China's state-owned forex investment firm reached an agreement with Morgan Stanley on Wednesday to invest five billion US dollars into the second largest US investment bank.

The injection was used to purchase equity units that are mandatorily convertible into Morgan Stanley common shares.

The two sides agreed CIC would be able to convert the equity units into Morgan Stanley common shares at a price no more than 1.2 times the reference price when the conversion was due.

CIC said the share of common stock underlying the convertible securities would not be issued until the exercise of the stock purchase contracts. This fell on August 17, 2010.

The equity units carried a fixed annual interest rate of nine percent before conversion.

Shares held by CIC were agreed to reach no more than 9.9 percent of the total.

Wednesday's agreement came along with Morgan Stanley reporting a larger-than-expected loss in the fourth fiscal quarter due to a 9.4 billion US dollar writedown from its exposure to subprime and other mortgage-related investments.

CIC said the purchase was made in accordance with its global investment strategy to seek attractive long-term returns with acceptable risk.

The Morgan Stanley investment was the third made by the company.

Earlier this month, it invested $3 billion in the US private equity firm Blackstone Group, as well as $100 million in the initial public offering of the China Railway Group in Hong Kong.

CIC was set up in September with initial capital of $200 billion from the country's massive foreign exchange reserve.

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