TCL Multimedia seeks US$140m from debt issue
TCL Multimedia Technology Holdings, the world's biggest television maker by unit sales, plans to raise US$140 million by selling convertible bonds to repay debt.
Deutsche Bank had secured subscription for at least US$300,000 worth of the issue, and the bank may find other independent buyers for the bonds, TCL Multimedia said.
Shares of the company, a unit of TCL Corp, rose as much as 18 per cent yesterday before closing at 57 HK cents, up 3.64 per cent.
'The bond issue is good news for TCL Multimedia, which needs money to keep on running,' said William Bao Bean, a partner at Softbank China and India.
The bond sale is the company's second fund-raising deal after a proposal last Thursday to raise HK$780.6 million by selling rights shares.
The five-year bonds pay annual interest of 4.5 per cent and can initially be swapped into shares at 40 HK cents each. The conversion price will be adjusted to between 30 HK cents and 60 HK cents, based on the stock's performance during the 26 trading days after the rights shares sale.
At the lowest end, Deutsche Bank can convert all its bonds for 3.6 billion TCL Multimedia shares, giving it a 38.32 per cent stake, while TCL Corp's stake will be diluted to 24.21 per cent from 39.31 per cent.
'If the company continues to lose money, the stock will go down to a certain level to trigger the lower conversion price, allowing the bank to take more of the company's assets,' Mr Bean said. 'But this is a worst-case scenario.'
Thomson Group, a French television maker that had a defunct venture in Europe with TCL, will become the third-largest shareholder from second with a stake ranging between 9.53 per cent and 12.08 per cent if all the bonds are converted.
'The net proceeds of the bonds will be used to repay existing syndicated loans and thus improve our financial position,' TCL Multimedia said.
TCL Multimedia has been troubled by the European business it inherited from a venture with Thomson Group, as consumers have been buying flat-panel television sets rather than its bulkier cathode-ray-tube models.
The Hong Kong firm's losses widened to HK$2.7 billion last year from HK$692 million in 2005 due to higher restructuring costs in its European operations.
