Friday October 17, 02:31 AM
Reserve Primary Fund says no priority for CIC in redeeming investment
BEIJING (XFN-ASIA) - Reserve Primary Fund said in a statement that Sovereign (LSE: SOGP.L - news) wealth fund China Investment Corp (CIC (Paris: FR0005025004 - news) ) will not receive priority ahead of other investors in the return of its funds.
'Stable Investment Corp, an affiliate of CIC, is an investor in the Reserve Primary Fund and will be receiving distributions from the Fund in accordance with the final Plan of Liquidation,' RPF said.
'Stable Investment Corp will not receive any funds prior to other investors in the Primary Fund, and the price per share it receives will be determined by the final Plan of Liquidation,' it added.
The CIC said Wednesday that it had asked RPF return CIC's funds in full, prior to the US fund's move to freeze redemptions, claiming that the US fund also had sent a written confirmation that it will return CIC's principal in full along with interest.
CIC also claimed to be a creditor of RPF, suggesting it will be among the first in line to be repaid, but the RPF statement indicates it classifies CIC as an investor. In liquidation cases, investors stand to lose up to 100 pct of their investments.
The US fund suspended redemptions last month when it became the first money market mutual fund to 'break the buck', with the par value of its units falling to 0.97 usd after it wrote off 785 mln usd invested in Lehman Brothers (NYSE: LEH - news) ' debt and commercial paper.
Neither CIC nor RPF have stated how much CIC invested in the US fund.
CIC was established by the Chinese government in late 2007 with 200 bln usd in capital. Its mission is to obtain better returns on China's foreign exchange reserve holdings.
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