As a petition for the winding up of the Bermuda parent of a failed Hong Kong investment bank and brokerage was presented to the Bermuda Supreme Court last week, key financial institutions were jockeying to acquire profitable pieces of the business.

Peregrine Brokerage Ltd. presented the petition to the court for the winding up of Peregrine Investments Holdings Ltd. The petition is to be heard on February 10.

A similar petition was presented to a court in Hong Kong. This week, officials there began breaking up the company for sale.

Richard Patching is the Bermuda-based partner of Price Waterhouse (Gray & Kempe), who has been appointed by the Supreme Court as joint provisional liquidator, together with Price Waterhouse partners in Hong Kong, David Richard Hague, Stephen Cleveland Caswell and Donald Edward Osborn.

Mr. Patching said: "The provisional liquidators have been appointed by the Hong Kong court over Peregrine and its subsidiaries, notwithstanding the fact that the Peregrine parent is a Bermuda company.

"It is quite normal that where substantially all of the business activities of the company and its assets are based in a different jurisdiction, there is a power to apply there to have liquidators appointed in that jurisdiction.

"In terms of the provisional liquidation, almost all of the activity will be taking place in Hong Kong. But those activities will be reported to the Bermuda court.'' Peregrine Investments, one of Asia's largest independent investment banks, was one of the most prominent victims of Asia's financial market turmoil.

But it had another Bermuda connection. Peregrine was to lead Bermuda-based Centre Re's thrust into Asian markets.

New York-based Zurich Centre Investments, Inc. (ZCI), the subsidiary of Bermuda-based Zurich Centre Investments Ltd., was on the verge of buying a 24.1 percent stake in Peregrine.

ZCI agreed in November to subscribe for US$200 million worth of 7.5 percent convertible preference shares of US$1,000 each in the company.

But Peregrine was unable to reach a deal with ZCI and was forced into default when a funding line of US$60 million was withdrawn earlier this month.

The firm was denied assistance by banks and the Hong Kong government after the crucial deal to provide vital funds collapsed.

The first sale of Peregrine's assets occurred on Monday when Chinese Estates Holdings Ltd. bought the failed brokerage's stake in Kwong Sang Hong International Ltd.

Chinese Estates said its 50 percent-owned unit, Power Jade Ltd., had entered into a conditional agreement to buy Peregrine's 70.6 percent stake in Kwong Sang Hong for HK$736.50 million (US$95.09 million).

Chinese Estates, which engages in property investment and development, securities investment and money lending, said the purchase would be made in cash.

Peregrine directors wound up the company early this month and appointed Price Waterhouse as provisional liquidators after the company's bankers and the Hong Kong government denied the company support.

A Peregrine source said on Monday two banks were still engaged in talks to buy parts of Peregrine.

Banque Nationale de Paris was looking at the Hong Kong/China equity arm, and another party was interested in the whole group, the source said.

"There were three financial institutions doing active due diligence last week,'' the source said.

Canadian Imperial Bank of Commerce had been the favourite party as of Saturday but walked out of talks this weekend, leaving Banque Nationale de Paris (BNP) and another bank which the source declined to name.

The South China Morning Post reported on Monday that until last Friday, Spanish bank, Banco Santander, was a front runner to buy the entire business of bankrupt Peregrine Investments.

Banco Santander declined to comment.

COURTS CTS