(Letter) The Fall Of CITIC Pacific
Yesterday its share price fell by 55% and its valuation is down from HK$31 billion to HK$14 billion.
Today its market capitalization fell another 25% to HK$10 billion.
Hong Kong-based CITIC Pacific was reported that it may lose HK$15 billion due to bad bets on Australian currency.
Larry Yung, Chairman of CITIC Pacific, apologized personally and on behave of the board of directors for the loss.
Group finance director Leslie Chang Li-hsien and group financial controller Chau Chi-yin resigned.
One day later, Frances Yung, daughter of board chairman Larry Yung, director of group finance, was demoted and transferred out of the department, to be reassigned.
News media have called CITIC Pacific state-owned. But it’s been run like a family business. The wholly state-owned CITIC Group is the biggest shareholder and owns 29% of Pacific, and Larry Yung owns 19%.
Yung is chairman of the board of directors. His son Carl is also an executive director and deputy managing director. His daughter Frances was director of group finance until she was demoted yesterday to take her share of the responsibility.
Although CITIC Group had a 29% stake, its management, led by chairman Kong Dan and president Chang Zhenming, failed to safeguard its interest in Pacific.
It was reported that Larry Yung is going to Beijing to secure a standby loan of HK$12 billion from its parent company CITIC Group.
Is this right, considering that now CITIC Pacific is only valued HK$10 billion and the parent company already owns 29%?
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