Asian Plans Can't Revive Hih Shares
Sydney Morning Herald
Saturday October 28, 2000
HIH Insurance shares hit new lows yesterday despite signs the troubled insurer is moving to restructure its Asian operations.
The shares hit a low of 30.5c before ending 3c lower at 33c with the company's decline accelerating since September's sale of its Australian personal lines operations to Allianz Australia.
Reports from Korea said HIH was in talks to buy a share in small Korean insurer Daehan Fire & Marine, which has a market capitalisation of just $40 million and incurred a loss in the past year.
A HIH spokesman confirmed the talks but said HIH was talking to others and there were no concrete proposals.
``It's just a small insurance company we are talking to. We are talking to others," he said.
``Within the context of our Asian operation, to build in scale or do whatever, we are unlikely to do that beyond our current scale without doing something else with the capital structure in Asia.
``It needs to double in size and we need to do joint ventures because there's no way we'll be doubling off our own bat."
But HIH has other problems, chiefly finding a chief executive to replace Mr Ray Williams, who earlier this month announced his resignation.
Recruitment firm Korn Ferry has been searching for a replacement for some months.
``We are painfully aware of the fact that the sooner that is done the better. In the sense to talk about the way going forward we would prefer that was coming from someone who has come in and had a look and formed their own impression," the spokesman said.
``We have not got time to do a BHP and take 12 months."
Also overhanging the stock is its issue of converting notes, which convert to ordinary shares with reference to the market price of HIH.
The minimum conversion price is 25c, at which price they would convert into 800 million shares sharply diluting ordinary shareholders' earnings per share. The notes do not mature until June next year at the earliest but can convert early in circumstances such as a takeover.
There have been suggestions that trading in the ordinary shares by these holders may be helping to depress the price.
© 2000 Sydney Morning Herald
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