Sino-Env : concerns over equity swap

Sino-Environment down 18.1% at $0.385 on strong volume on concerns over possible mark-to-market loss from company's equity swap. China-based firm announced in Jun $149 million convertible bond issue due Jul '13 with 4% coupon, concurrent equity swap with Morgan Stanley at $1.8276/share as hedging tool. Swap will result in loss for company if share price falls during tenure. "This loss will be booked in their P&L statement and impact their accounting profit," says analyst; "on hindsight, a lot of people can question why they went into this, but in this current market condition, I don't think someone of their status can get a loan at 4% without going into all these complicated financing arrangements." Adds share price also hurt by ongoing redemption by funds. 3Q08 results expected in Nov.