Sinopec Shanghai Proposes A Shares to Minority Shareholders

Sinopec Shanghai Petrochemical Co, a unit controlled by parent China Petroleum and Chemical Corp, said it will offer minority shareholders 3.2 state-owned A shares for every 10 they hold in a revived share reform program.

The proposal is the same as the one in October last year, which had been voted down by minority shareholders.

Shareholders will vote again on the offer on January 15, Sinopec Shanghai, a key ethylene maker, said in a statement filed with the Shanghai Stock Exchange yesterday.

China has launched a nationwide program in 2005 to convert nontradable state-owned shares to tradable chips, in line with international practice. Most state companies listed on the Chinese mainland exchanges have completed the process.

Typically, listed companies have to give bonus shares to minority shareholders as compensation in such a program because disposing the nontradable shares could dilute share value.

The parent, also known as Sinopec, will offer 230.4 million shares worth about 3.5 billion yuan (US$475 million) to minority shareholders based on Sinopec Shanghai's last quoted price of 15.26 yuan on November 30.

Sinopec's holdings in Sinopec Shanghai will be cut to 52.36 percent from 55.56 percent after the share reform.

Meanwhile, Sinopec Yizheng Chemical Fiber Co, another Sinopec unit, said it will also offer minority investors 3.2 shares for every 10 held, also in a second attempt to seek investor approval. Sinopec owns 42 percent of Sinopec Yizheng.