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Pricing hits Lyonnais shares
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June 29, 1999: 11:14 a.m. ET
French government confirms conversion terms for Credit Lyonnais
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LONDON (CNNfn) - The final set of terms for the privatization of France's Crédit Lyonnais sent the price of its investment certificates tumbling by 4 percent Tuesday.
The French government priced the retail issue of 42 percent of the bank's float at 26.2 euros Monday, while the sale of a further third of the bank to seven core shareholders was priced at 27.3 euros a share. Both were at the top end of expectations.
The little-traded non-voting certificates, which account for 10.2 percent of the bank's capital, have acted as a proxy for the flotation price in recent weeks. The shares soared as high as 41.74 euros during the marketing for the issue, scheduled for July.
The certificates fell 4 percent to 35.50 euros in Tuesday trading and are expected to continue to drop as investors cash in on what analysts said was an inflated price. "We were expecting a convergence between the certificates and the new shares," said Didier Valet, banking analyst at Dresdner Kleinwort Benson in Paris.
The government said Tuesday that the certificates will be converted into new shares through a 6 for 35 rights issue. The subscription price was set at 24.9 euros plus a 0.6 euro fee to secure voting right status.
Analysts said Tuesday's selloff was driven by hedge funds cashing in on the inflated certificate price and tapping institutional buyers fearful of not securing a full allocation of flotation shares.
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Crédit Lyonnais
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