HONG KONG — BlackRock, the world’s largest money manager, has sued Hidili Industry International Development after a mistaken request to convert bonds of the Chinese coal miner into shares.
Requests to convert 104.6-million yuan ($16.8m) of convertible bonds due in 2015 were mistakenly issued by or on behalf of two BlackRock funds in December, according to a lawsuit filed in the Hong Kong High Court last week.
Hidili knew or ought to have known that the request was issued by mistake and therefore should be void, BlackRock Japan and BlackRock (Singapore), the investment managers of the funds, said in the lawsuit. The funds were entitled to have all or some of the bonds redeemed on January 19, according to the lawsuit, and the conversion of the bonds should be set aside.
Hidili’s Hong Kong- traded shares have fallen 13% since January 21, just before it warned investors of a substantial decrease in after-tax profit last year from 2011 because of low sales and selling prices in the second half.
Hidili announced on January 29 that two plaintiffs had sued it in Hong Kong, seeking to void an erroneous conversion of 104.6-million yuan of bonds into shares, instead of intended requests for redemption. Hidili, a producer of coking coal, said it was trying to verify that it had been served with the writ and to seek legal advice about it.
The notes were part of a 1.7-billion yuan tranche of convertible bonds sold by Hidili in January 2010. Bondholders owning nearly 1.6-billion yuan of the convertible securities submitted redemption requests and it paid out 1.7-billion yuan to buy back their bonds on January 21, Hidili announced that day.