Citic Pacific's Yung Heads to Beijing to Get Loans

Oct. 22 (Bloomberg) -- Citic Pacific Ltd. Chairman Larry Yung is depending on support from Beijing to help keep his company afloat after HK$15.5 billion ($2 billion) of currency losses triggered a record stock plunge and possible asset sales.

Yung, the son of a former Chinese vice president, will fly to the capital today to seek a $1.5 billion loan, Managing Director Henry Fan said. Citic Pacific said late yesterday it may sell a 56.7 percent stake in a car and food distributor.

Citic Pacific shares slumped 55 percent yesterday and its debt ratings were cut by Moody's Investors Service and Standard & Poor's Ratings Services after the company disclosed the impact of unauthorized wrong-way bets on the Australian dollar. The loss is almost four times the $550 million China Aviation Oil (Singapore) Corp. lost on jet-fuel trades in 2004.

``The incident may trigger its lenders to ask it to prepay other loans,'' said Kevin Luo, a Shenzhen-based analyst with Guotai Junan Securities Co. ``It may have to close 80 percent of its hedging position, indicating a cash outflow of HK$12 billion which could be covered by the parent's lending.''

The stock slump wiped out HK$17.5 billion of market value and slashed the value of Chairman Yung's 19 percent stake by HK$3.3 billion. Yung, 66, was ranked China's fifth-richest person with $3.7 billion by Hurun Inc., a Shanghai-based research company, this month.

Source:http://www.examiner.com/x-840-Personal-Finance-Examiner