Embattled mainland conglomerate CITIC Pacific will receive a massive bailout from its parent, the South China Morning Post reported. CITIC Group will provide Hong Kong-listed CITIC Pacific with a US$1.5 billion standby loan to be replaced by convertible bonds of the same amount. CITIC Group will also assume all the liabilities from CITIC Pacific’s derivatives contracts in exchange for US$1.2 billion. "With this financing in place, CITIC Pacific can now move forward and continue developing its business," CITIC Group’s president Chang Zhenming said. CITIC Pacific last month revealed that it faced up to US$2 billion in potential losses arising from bad currency bets on the Australian dollar. CITIC Pacific had entered into the exotic foreign exchange forwards contracts in order to fund an iron ore project in western Australia. CITIC Pacific’s stock has fallen more than 80% since the beginning of the year.
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