Arrangements for Adjustment of China Resources Structured Products and Options
Market Operations
29 Dec 2014
Hong Kong Exchanges and Clearing Limited (HKEx) has announced the arrangements for the adjustment to China Resources Land Ltd (China Resources Land) structured products and options to account for China Resources Land’s clawback offer.
Offer overview
For details of the clawback offer, please refer to the announcement made by China Resources Land on 8 December 2014.
Highlights of the adjustment arrangements are set forth below. Investors should consult their brokers for further details, or if they have any questions regarding the adjustment.
Structured products with shares of China Resources Land as underlying asset
The listing documents of all existing structured products with the shares of China Resources Land as underlying asset contain provisions that deal with a corporate action of the underlying company. Structured product issuers will make announcements in the evening of 12 January 2015 regarding the adjustments to the terms of their structured products (including the entitlement and exercise price as appropriate). Investors should read carefully the contents of such announcements.
China Resources Land Options
Trading Arrangements
The trading arrangements for the existing China Resources Land stock options under trading symbol CRL will be as follows:
| 1. |
Adjustment and Transfer of Outstanding Positions
Open positions of China Resources Land stock option series under trading symbol CRL which exist after the market close on the business day immediately before the ex-date will be adjusted and transferred to stock option series under trading symbol CRB.
|
| 2. |
Introduction of New Stock Option Series for Trading
On the ex-date, a new China Resources Land stock option series based on the standard contract size will be introduced for trading under the standard trading symbol CRL. |
Adjustment procedures
|
Adjustment Term |
Formula |
Remarks |
|
Adjustment Ratio(AR) |
9 old shares + (2 offer share x $18.0104 / $S*)
9 old shares + 2 offer share |
Rounded to the nearest 4 decimal places. Adjustment will only be made if the AR is smaller than 1. |
|
Adjusted Exercise Price (AEP) |
Exercise price of outstanding option series x AR |
Rounded to the nearest 2 decimal places |
|
Adjusted Contract Size (ACS) |
Exercise price of outstanding option series x
(2,000 shares / AEP) |
Rounded to the nearest 4 decimal places |
|
* |
Where $18.0104 is the subscription price for the offer share and $S is the underlying stock closing price on 12 January 2015 (the business day immediately before the ex-entitlement day). |
|
Contract |
Trading Symbol |
Contract Size
(Shares) |
Availability For Trading |
Addition of New Stock Option Series on and after the Ex-entitlement day |
|
Adjusted |
CRB |
ACS |
From ex-entitlement day to
30 December 2015 |
No |
|
Standard |
CRL |
2,000 |
From ex-entitlement day onwards |
Yes |
For avoidance of doubt, the objective of the procedures above is to adjust the option contracts according to the theoretical value of the entitlement if there is a positive value before the ex-entitlement day. If there is no intrinsic value with the entitlement, ie the underlying price closes at or below the subscription price of $18.0104 on 12 January 2015 (the business day immediately before the ex-entitlement day), no capital adjustment will be made.
Investors should note that the adjusted and standard option series above have different contract sizes. There will not be any changes to the number of open positions and other contract terms after a transfer of positions.
Ends