CHINA'S $US200 billion sovereign wealth fund, China Investment...

CHINA'S $US200 billion sovereign wealth fund, China Investment Corp, has committed $200 million to a financing facility for the troubled Goodman Group and may emerge with a substantial shareholding in Australia's biggest industrial property trust.

The move came after Macquarie Group recently agreed to provide Goodman with $300m to refinance its debt commitments for 2009.

But the move failed to impress Goodman security holders, who sold the stock 15 per cent lower to 41.5c because the deal, like the agreement with Macquarie, involved the issue of new options that would dilute their holdings.

Under the CIC deal, Goodman will issue the group with 276 million options at a strike price of 40c, which equates to a stake of about 8 per cent in Goodman.

But market sources said CIC might seek government approval to acquire up to 20 per cent of Goodman.

"There is every chance CIC would want to get in a bigger way," a Sydney analyst said.

To accommodate CIC's funds, Macquarie Group scaled back its original facility by $15m to $285m.

Goodman repaid a $437m facility last month with the Macquarie bridging loan.

Michael McCormack, a Shanghai-based analyst who follows CIC closely, told The Australian that Goodman was a good fit for CIC.

"Goodman represents the right group with the right structure, the right investment and the right location," said Mr McCormack, executive director of research house Z-Ben Advisers.

Mr McCormack said CIC wanted to invest in a country that would benefit from China's development and growth.

Goodman chief executive Greg Goodman said CIC was interested in logistic providers and there were "two or three" companies of the size and scale to suit it.

"We are the only company with the big footprint and are fully integrated in this part of the world," Mr Goodman said.

He expected Goodman to work with CIC as joint venture partners in projects, including some in China, where Goodman had about $200m worth of assets and a similar amount in development projects.

"This is potentially a long-term relationship. We will be working with them in a way which will be complementary to our funds management development and total business," Mr Goodman said.

Citigroup analyst Peter Cashmore said Goodman had about $255m to refinance in September and December, and the CIC investment would take it "across the line".

This would buy Goodman time until the next expiry in May next year, when it would have to repay $520m, he said.

Mr Goodman said the group would need to raise $1.5bn from fresh capital injections to take care of its debt obligations beyond 2012.

"We've made it clear that if we were to inject any further equity into the group we would be doing it through a rights issue to give all stockholders the opportunity to participate."

Mr Goodman would not be drawn on the size of the planned raising.

In a research note this week, Goldman Sachs JBWere said it would need to raise $1.25bn.

The firm's head of Australian real estate investment trusts, Simon Wheatley, said the deals with Macquarie and CIC were the first stage of further capitalisation.