There might be two main reasons for the chilly attitude toward cash option right: one is that shareholders will gain less from cash option right than the other option – share swap; and the other is because investors have confidence in Chalco after it replaces the two units for integrated listing on the Shanghai bourse through the share swaps.

In the reform plan of Aluminum Corp of China (Chalco, ACH.NYSE, 2600.HK), Chalco has offered two options for investors – share swap and cash option right. Shareholders of the two Shanghai-listed units can make share swap with Chalco at a ratio of 1:3.15 for Shandong Aluminum and 1:1.8 for Lanzhou Aluminum. Non-tradable shareholders of Lanzhou Aluminum will make at 1:1. After the swap, the two units will delist and Chalco will go listing on the Shanghai Stock Exchange as a whole.

However, if investors choose cash option right, they can only get 16.65 yuan for Shandong Aluminum holders and 9.5 yuan per share for Lanzhou Aluminum’s, much lower than their last close price which stood at 25.41 yuan and 14.61 yuan.