May 28, 2015 / 6:38 AM / 3 years ago

UPDATE 1-Chinese developer Evergrande seeks $613 mln in HK share offering

(Adds analyst comments, other details)

HONG KONG, May 28 (Reuters) - Evergrande Real Estate Group , China’s fourth largest property developer by sales, is seeking to raise up to $613 million in a Hong Kong share offering on Thursday, the latest developer to refinance following a recent share rally.

Already this month, at least five developers including state-backed China Resources Land and Greenland Hong Kong have raised over HK$15 billion ($1.93 billion) through share placements.

Evergrande, the most indebted of China’s top 10 developers, is offering 747.6 million new shares in an indicative range of HK$6.22 to HK$6.36 each, equivalent to a discount of up to 10 percent to Wednesday’s close of HK$6.91, Thomson Reuters publication IFR reported on Thursday, citing a term sheet of the deal.

The share sale is equivalent to about 4.8 percent of Evergrande’s enlarged share capital.

Proceeds from the offering, which could raise up to HK$4.75 billion, would be used for refinancing and working capital, the term sheet said.

Typically, issuers are barred from further share sales for a period of up to 90 days to avoid an oversupply of stock in the market that could pressure share prices.

In an unusual move, Evergrande will be allowed to sell shares again before that period if the sale is for less than 10 percent of the issued shares and the sale is to a financial institution, the terms showed. The financial institution would have to hold the shares for 12 months.

Analysts said they expect more companies to refinance as the latest stock rally offered opportunities to lower their debt ratios.

Jefferies said in a note that it expected companies with high capital needs such as Agile Property Holdings ltd and Sunac China to follow suit.

Agile and Sunac were not immediately available for comment.

Rating agency Standard and Poor‘s, however, said in a conference call last week that the size of these recent fund raisings by property developers were not enough to change the credit profile of the companies to a strong one.

Evergrande declined to comment on the share sale plans. Its shares were suspended from trading on Thursday.

CLSA, Credit Suisse, Haitong and Jefferies were hired as joint placing agents of the Evergrande share offering, the term sheet said.

$1 = 7.7534 Hong Kong dollars Reporting by Fiona Lau of IFR; Additional reporting by Elzio Barreto; Writing by Clare Jim; Editing by Michael Perry and Richard Pullin

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