New World Development proposes $3.2 billion rights issue

BEIJING/HONG KONG, Nov 15 : Hong Kong property developer New World Development on Sunday proposed a rights issue to raise about HK$24.9 billion ($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 maturity of the remaining 90 per cent by two years

• It plans to use another third to repay debt including senior notes and deferred distribution of its perpetual securities

• After the rights issue, New World's net debt to total equity ratio will drop to 48.3 per cent from 68.3 per cent

• The developer aims to reduce total debt by between HK$40 billion and HK$50 billion by the end of 2031 to HK$93 billion to HK$103 billion

• New World's shares will resume trading on Monday after being suspended on Friday pending the announcement