New World Development unveils plan to raise HK$24.9b

Property developer New World Development on Sunday proposed a rights issue to raise about HK$24.9 billion, a company filing showed. The plan offers shareholders 11 rights shares for every existing share at HK$0.90 each, representing a 26.9 percent discount to the theoretical ex-rights price of HK$1.23 per share. The subscription price also represents an 81.5 percent discount to the last closing price of HK$4.87. The company plans to use about 34 percent percent of the proceeds to prepay 10 percent of about HK$82 billion in bank loans and extend the maturity of the remaining 90 percent 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 percent from 68.3 percent. Controlling shareholder Chow Tai Fook Enterprises (CTFE), which owns about 45.3 percent of the company, has committed to take up its full entitlement, while the remaining shares will be fully underwritten. The maximum CTFE commitment is about HK$18.7 billion. New World Development's shares will resume trading on Monday after being suspended on Friday pending the announcement. The company has been trying to cut debt, dispose of assets and bolster liquidity amid...