Textile producer and box printer tap market for $1.5b
Weiqiao sells $830m shares while Hung Hing seeks up to $750m from bond issue
Weiqiao Textile and Hung Hing Printing Group are raising up to $1.58 billion by issuing shares and bonds. Shares of both companies were suspended from trading yesterday pending announcements of their fund-raising activities.
Weiqiao, China's biggest cotton textile producer, tapped the market for $830.6 million by offering 68.93 million new H shares at $12.05 each yesterday, a 5.49 per cent discount to its last closing price, according to market sources. The company initially indicated a price range of $12.05 to $12.25 per share.
Weiqiao's share price has risen 18.05 per cent so far this year. Possible reasons for the rise include improved sentiment about the textile trade since the Sino-United States textile agreement in November last year and a 287.7 million yuan tax break Weiqiao obtained.
People familiar with the transaction said the book was 2.5 times covered and 70 per cent of the shares were sold to Asian-based investors and 30 per cent to European investors. Morgan Stanley is the share sale arranger.
The funds raised would be used mainly to expand Weiqiao's denim production capacity, sources said.
Meanwhile, Hung Hing was seeking up to $750 million from the sale of five-year convertible bonds to expand production and refinance debt, sources said.
The offer size is $600 million with an option to increase by $150 million. The zero-coupon bonds were sold at par and priced with a conversion premium of 25 per cent to 30 per cent above the $5.20 reference price.
The bonds can be converted into shares at $6.50 to $6.76 each. If the bonds are not converted, they will provide a yield to maturity of 2.5 per cent to 3 per cent per year.
Hung Hing plans to use the funds to expand production in Heshan, Guangdong province, where the first phase is scheduled to start operations in the second quarter.
The funds will also be used to upgrade production facilities in Zhongshan and possibly for acquisitions in the company's core business of paper and carton box printing and manufacturing.
Some of the funds will be used for the refinancing of the company's short-term debt and as general working capital.
Deutsche Bank is the sole bookrunner of the bond issue.