Paliburg rights issue aims for HK$554.6m
Paliburg Holdings, controlled by Lo Yuk-sui, yesterday said it planned to raise up to HK$554.6 million from a planned seven-for-20 rights issue to repay debt and finance a mainland property project.
The property development company priced the rights shares at 21 HK cents, a 32.3 per cent discount to the stock's last price of 31 HK cents before it was suspended on September 21.
Paliburg will also issue three warrants for every seven rights shares. The warrants have an exercise price of 21 HK cents, subject to adjustment.
A rights issue is a method of raising capital from existing shareholders, who are given opportunity to buy a specified number of shares, usually at a discount to the market price.
The company said about 2.64 billion rights shares and 1.13 billion warrants would be issued if all shareholders accepted the offer.
Century City, Paliburg's parent company, and chairman Mr Lo and his associates have committed to subscribe to all of their entitled shares, at least 1.488 billion shares. Paliburg's gross proceeds are estimated to be HK$312.5 million from this portion of the rights issue.
If a total of 1.13 billion warrants are exercised at the initial exercise price, the aggregate gross proceeds would be approximately HK$237.7 million.
If minority shareholders refuse to take up their offer, Century City's stake in Paliburg could rise to 59.25 per cent from the existing 50.63 per cent following the rights issues and exercise of the warrant issue. Mr Lo and his associates' stake would rise to 6.69 per cent from 5.71 per cent.
If the remaining shares are also taken up by Century City, its stake in Paliburg would increase to 65.18 per cent, while Mr Lo and his associates' holdings would stay at 5.71 per cent.
Paliburg said HK$309 million of the proceeds would be used to redeem notes due next month, and HK$197 million would be used to repay a bank loan. The rest would be used for an existing property project in the mainland.
Century City and Paliburg will resume trading today.