Gome founder Wong raises stake for HK$549m

PUBLISHED : Saturday, 01 August, 2009, 12:00am
UPDATED : Saturday, 01 August, 2009, 12:00am

Wong Kwong-yu, the former chairman and largest shareholder of Gome Electrical Appliances Holding, bought 816.32 million shares of the mainland electric appliance retailer in an open offer, boosting his stake in the company he founded from 33.7 per cent to 34 per cent.

Based on the subscription price of 67.2 HK cents, Mr Wong, being investigated by mainland authorities for economic crimes, paid HK$548.57 million for the shares. The firm's open offer of 2.297 billion shares was 98.48 per cent subscribed by 74 valid acceptances and raised HK$1.54 billion.

Gome's current chairman and president, Chen Xiao, also bought some open offer shares to maintain his stake at 1.9 per cent.

Mr Wong had offloaded 235 million Gome shares at HK$1.704 each last week to raise HK$400 million in a transaction that was interpreted as him preparing to join the open offer.

Cash-strapped Gome said in June that it aimed to raise HK$3.24 billion by issuing convertible bonds to private equity fund Bain Capital of the United States and offering 18 new shares for every 100 held by existing investors at 67.2 HK cents each.

As Bain is also the underwriter of the offer, it will buy the remaining 34.84 million open offer shares that were not subscribed, giving the investment firm a 0.2 per cent stake.

Market observers had said it could increase the likelihood of conflict between Mr Wong and the new investor, Bain, if he bought a significant amount of open offer shares.

Mr Wong, ranked China's richest person last year by the Hurun Institute, was detained in November last year for alleged share price manipulation. He resigned as Gome chairman in January. His detention is linked to a widening corruption probe that has seen senior mainland officials arrested such as Zheng Shaodong, a former assistant minister of public security, and Hong Kong businessman Lin Chiu.

Gome closed up 4.19 per cent at HK$2.24 yesterday, with HK$1.11 billion worth of shares traded.