The proposed fundraising offers 11 new shares for each existing share at a steep discount to the theoretical ex-rights price, with Chow Tai Fook Enterprises agreeing to fully underwrite the deal. New World will use roughly one-third of the funds to prepay 10 per cent of its bank loans and extend the remaining maturities by two years. Another third of the capital will target obligations such as senior notes and deferred perpetual distributions. The initiative is projected to drive the firm's net gearing down by twenty percentage points.
Key points
The capital injection will immediately reduce the developer's net debt to total equity ra…: The capital injection will immediately reduce the developer's net debt to total equity ratio from 68.3 per cent down to 48.3 per cent.
Management has established a long-term goal to reduce total corporate debt by up to HK$50…: Management has established a long-term goal to reduce total corporate debt by up to HK$50 billion by the end of 2031.
Trading in New World Development shares is set to resume on Monday following a trading su…: Trading in New World Development shares is set to resume on Monday following a trading suspension that occurred on Friday.
Sources checked by our analysis pipeline: 1
BEIJING/HONG KONG: Hong Kong property developer New World Development on Sunday (Nov 15) proposed a rights issue to raise about HK$24.9 billion (US$3.17 billion), a company filing showed.
New World Development has been trying to cut debt, dispose of assets and bolster liquidity amid tight credit conditions and a weak property market.
The plan offers shareholders 11 rights shares for every existing share at HK$0.90 each, representing a 26.9 per cent discount to the theoretical ex-rights price of HK$1.23 per share.
The subscription price also represents an 81.5 per cent discount to the last closing price.
Controlling shareholder Chow Tai Fook Enterprises (CTFE), which owns about 45.3 per cent of the company, has committed to take up its full entitlement and fully underwrite the remaining shares. The maximum CTFE commitment is about HK$18.7 billion.
A CTFE statement said it supports New World Development resuming dividend payments when its financial performance and liquidity permit.
The company plans to use about 34 per cent of the proceeds to prepay 10 per cent of about HK$82 billion in bank loans and extend the…
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