|
Lyonnais certificates slide
|
 |
June 15, 1999: 7:35 a.m. ET
French bank's non-voting securities drop almost 5%; still above state price range
|
LONDON (CNNfn) - Investment certificates of Crédit Lyonnais, which represent the 10 percent of the privatizing French bank already in the public domain, dipped nearly five percent at the Paris open Tuesday as investors reacted to the French state's terms for converting them into new voting stock.
Despite the drop, the shares still remained above the upper end of the suggested price range for Lyonnais stock unveiled Saturday by the French Finance Ministry.
Finance Minister Dominique Strauss-Kahn announced a price range for Lyonnais stock of 22.5 to 26.2 euros ($23.60 to $27.50), valuing the ailing bank at a four to 18 percent discount to its actual value. A final price will be fixed on June 28.
On Tuesday, the bank's non-voting investment certificates opened 4.85 percent lower, at 29.50 euros -- more than 12 percent above the Ministry's ceiling price.
Under swap terms announced Monday, holders of Lyonnais investment certificates will be required to pay 0.60 euro to convert each certificate into new stock with voting rights.
Of the 134 million state-held shares being sold by the bank, 121 million are earmarked for retail and institutional investors. Of those, Lyonnais employees will have the option to buy 13 million shares.
An additional five percent of the capital on the block -- or about six million shares -- may be used to enhance the offering price.
Analysts attributed the gap between the investment certificate's opening price Tuesday and the state price to investor enthusiasm in the run up to the Lyonnais float, as bookbuilding gains steam.
But they cautioned that the certificates have already lost nearly a quarter of their value over the past two weeks, falling from 38 euros to Tuesday's level of 29.50.
"A lot of people are buying non-voting shares because they think it's a good way to get shares," said Bourjac Nettet, an analysts with CCF Securities based in Paris. "Everyone is quite convinced that the privatization of Credit Lyonnais will be a great success.
Nettet suggested the certificates will ultimately fall to around 26 euros as bookbuilding slowly winds up. "We need another 10 days to know the final price," she said.
Under the Lyonnais privatization, the French government is selling a 33 percent stake to seven core shareholders who will each hold stakes of between one and 10 percent in the bank.
The core investors are expected to help play a remedial role in restoring the bank -- once France's leading financial institution before a sharp contraction forced it to seek a state-led bailout -- back to health.
Aside from the one-third interest controlled by the core shareholders, a 42 percent stake will go to the public, and five percent will go to Lyonnais staff. Ten percent will remain in state hands.
|
|
|
|
|
 |
|
