China International Trust and Investment Corp will purchase convertible bonds in Citic Pacific that, when converted, will double its stake in the Hong Kong-based company to about 57 per cent. The bonds are convertible at HK$8 a share, representing a 32 per cent premium to their last close on October 31.

While the deal will dilute existing shareholders, in-cluding Citic Pacific chairman Larry Yung and Power Corp of Canada, it will also see the Chinese government-owned parent take responsibility for currency contracts that Citic Pacific said last month could cost it $2bn and potentially much more.

“Citic Group will . . . assume the liabilities and benefits of the [foreign exchange] contracts,” Citic Pacific said yesterday in a statement to the Hong Kong stock exchange. “As a result, from completion Citic Pacific will no longer bear the economic burden, or enjoy the benefits, of the contracts.” Citic Pacific shareholders will also be asked to approve a “whitewash” waiver allowing Citic Group to increase its stake without making a general offer.