China Railway Construction to raise US$500m from bond issuance

PUBLISHED : Tuesday, 19 January, 2016, 9:12am
UPDATED : Tuesday, 19 January, 2016, 9:12am

China Railway Construction, one of the mainland’s two major state-backed railway builders, plans to raise US$500 million by issuing a bond convertible to shares at a big premium to fund business operations.

The company has engaged JP Morgan, China International Capital Corp and UBS as joint lead managers of the issuance of the bond, which is convertible into shares equivalent to 2.7 per cent of its total issued shares.

The zero-coupon will pay no interest and will mature in five years.

The conversion price is HK$10.30 per Hong Kong-listed H-share, 37.5 per cent higher than the closing price of HK$7.49 on Monday.

The company plans to use the proceeds to fund domestic and overseas projects, investment, potential mergers and acquisitions, bolster working capital and repay bank loans, it said in a filing to the Hong Kong’s stock exchange on Tuesday.

“The board considers that the issuing of the bonds represents an opportunity to potentially enlarge

and diversify the shareholder base of the company, to improve the liquidity position of the group,” it said.

Its last equity fund-raising exercise took place in December 2014, when it raised 1.24 billion yuan by selling mainland-traded A shares at 8 yuan each to 10 subscribers to finance projects and repay loans.

It posted 5.3 per cent year-on-year growth in net profit to 7.56 billion yuan in the first nine months of last year, as revenue edged up 0.13 per cent to 413 billion yuan.